OILPALM PLANTATION MANAGEMENT CERTIFICATION … Pamol Sabah by SGS.pdf · OILPALM PLANTATION...

MY01827 Pamol 2008 MA

Summary Report against RSPO MYNI Requirement for

IOI Corporation Bhd, Pamol Estates, Sabah

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OILPALM PLANTATION MANAGEMENT CERTIFICATION REPORT

Project Nr: MY01827Certificate Nr: SGS-RSPO/PM-00201

Validity Period: 3 Feb 2009 – 2 Feb 2014

Report Ref #: MY01827-03 Pamol MA 2008 Public Summary Report

Client: IOI Corporation Berhad

RSPO membership #: 010-04(O)

Web Page: http://www.ioigroup.com/business/busi_plantoverview.cfm

Address:

Head office:Level 8, Two IOI SquareIOI Resort, 62502 Putrajaya Malaysia.

Country: Malaysia

Plantation Unit being Evaluated

Pamol Sabah, Sandakan, Sabah

Total Plantation Area 13,464.5 Hectare

Company Contact Person:

Mr. S.S. RagupathySenior Plantation Controller

Address:

IOI Corporation BhdP O Box 203Sandakan, Sabah

Tel: +6089 515 652

Fax +6089 515 636

Email: [email protected]

Evaluation dates:

Main Evaluation 25 – 30 May 2008

Close CAR visit 18 – 19 July 2008

Surveillance 1 January 2010

Surveillance 2 January 2011

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

Member of SGS Group (Société Générale de Surveillance)

mailto:[email protected]



IOI Corporation Bhd’s, Pamol Estates, Sabah

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TABLE OF CONTENTSTABLE OF CONTENTS

OILPALM PLANTATION MANAGEMENT CERTIFICATION REPORT............................................................1

Table of Contents..........................................................................................................................................2

List of Tables.................................................................................................................................................4

List of Figures................................................................................................................................................4

List of Plates..................................................................................................................................................4

List of Maps...................................................................................................................................................4

LIST OF ABBREVIATIONS.............................................................................................................................5

EXECUTIVE SUMMARY.................................................................................................................................7

INTRODUCTION...........................................................................................................................................11

1. SCOPE OF CERTIFICATION ..................................................................................................................... 11

2. COMPANY BACKGROUND ....................................................................................................................... 13

2.1 Ownership .......................................................................................................................................... 13

2.2 Company Vision and Core Values ..................................................................................................... 13

2.2.1 Commitment to Sustainability ....................................................................................................... 14

2.3 Company History ............................................................................................................................... 14

2.4 Organisational Structure .................................................................................................................... 15

2.5 Other Land Uses ................................................................................................................................ 19

3. PLANTATION MANAGEMENT SYSTEM ................................................................................................... 19

3.1 Bio-physical Setting ........................................................................................................................... 19

3.2 History of Use .................................................................................................................................... 23

3.3 Plantation Establishment and Management Process ....................................................................... 23

3.4 Production of CPO and Palm Kernel Oil ............................................................................................ 25

FFB Yield 27

3.4.1 FFB Yield Per Hectare ................................................................................................................... 27

3.4.2 Oil Extraction Rate ........................................................................................................................ 28

3.4.3 Palm Kernel Production ................................................................................................................ 28

4. SOCIO-ECONOMIC AND ENVIRONMENTAL CONTEXT .......................................................................... 29

4.1 Social Aspects ................................................................................................................................... 29

4.2 Administration, Legislation and Guidelines ...................................................................................... 30

5. OTHER OIL PALM PLANTATIONS OWNED BY THE COMPANY AND PLAN FOR CERTIFICATION UNDER RSPO P&C ....................................................................................................................................... 34

6. STAKEHOLDERS NOTIFICATION ............................................................................................................. 37

7. PREPARATION FOR THE EVALUATION .................................................................................................. 37

7.1 Schedule ............................................................................................................................................. 37

7.2 Team ................................................................................................................................................... 38

----------------------------------------------------------------------------------------------------------------------------------------------------------------------SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com





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8. THE EVALUATION .................................................................................................................................... 38

8.1 Opening Meeting ................................................................................................................................ 38

8.2 Document Review .............................................................................................................................. 38

8.3 Sampling and Evaluation Approach .................................................................................................. 39

8.4 Field Assessments ............................................................................................................................. 39

8.5 Summing Up and Closing Meeting .................................................................................................... 40

9. EVALUATION RESULTS ........................................................................................................................... 41

PRINCIPLE 1: Commitment to transparency...................................................................................................................41

PRINCIPLE 2: Compliance with applicable laws and regulation.....................................................................................41

PRINCIPLE 3: Commitment to long term economic and financial viability......................................................................44

PRINCIPLE 4: Use of appropriate best practices by growers and millers:......................................................................45

Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored ................................................................................................................................................. 45

Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield. ..................................................................................................... 45

Criterion 4.4 Practices maintain the quality and availability of surface and ground water .................. 47

PRINCIPLE 5: Environmental responsibility and conservation of natural resources and biodiversity............................52

PRINCIPLE 6: Responsible consideration of employees and of individuals and communities affected by growers and mills 56

Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties. .............................. 57

PRINCIPLE 7: Responsible development of new plantings.............................................................................................62

Criterion 7.2 Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations. .................................... 62

PRINCIPLE 8: Commitment to continuous improvement in key areas of activity............................................................62

10. CHAIN OF CUSTODY/TRACEABILITY OF CRUDE PALM OIL (CPO) ..................................................... 64

11. ASSESSMENT DECISION ....................................................................................................................... 66

12. ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY AND FORMAL SIGN-OFF OF ASSESSMENT FINDINGS ...................................................................................................................................................... 67

Attachement:

Attachement 1: Record of Corrective Action Requests (CAR)

Attachement 2: Record of Stakeholder Comments






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List of Tables

Table 1: Summary of CPO and PK production...........................................................................................11

Table 2: Summary of production area and annual production of Fresh Fruit Bunches (FFB) by Estates11

Table 3: Legal land ownership of IOI Pamol Estates..................................................................................13

Table 4: IOI Pamol Estate hectarage statement .........................................................................................23

Table 5: FFB production from July 2002 to June 2007...............................................................................27

Table 6: Palm Kernel production from July 2007 to June 2008 .................................................................28

Table 7: Socio-Economic Profile of Villages within and Surrounding the Estates....................................30

Table 8: National legislation, regulations, guidelines and codes of best practice relevant to the Malaysian oil palm plantation industry, environmental and social sectors................................................31

Table 9: List of other oil palm plantation owned by IOI and plan for certification under RSPO P&C.......34

Table 10: Summary of team member’s experience.....................................................................................38

Table 11: Assessment schedule.................................................................................................................39

Table 12: Records of FFB received, CPO output and the CPO and PK dispatched from Pamol mill........65

List of Figures

Figure 1: Management structure for IOI Pamol Sabah, Sandakan region (as of January 2008)................18

Figure 2: Pamol Sabah oil mill management structure..............................................................................18

Figure 3: Annual rainfall for each estate from 2003 to 2007.......................................................................21

Figure 4: Mean monthly rainfall for each estate from 2003 to 2007...........................................................22

Figure 5: Palm oil processing flowchart.....................................................................................................26

Figure 6: FFB yield per ha for each estate from June 2002 to July 2007...................................................27

Figure 7: Oil extraction rate from July 2007 to June 2008..........................................................................28

List of Plates

Plate 1: Policy statement of sustainable palm oil.......................................................................................16

Plate 2: Quality policy statement.................................................................................................................17

List of Maps

Map 1: Overview map of Pamol estates......................................................................................................20

Map 2: Map showing location of estates and assessment routes.............................................................25






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LIST OF ABBREVIATIONS

CAR Corrective Action RequestCHRA Chemical Health Risk AssessmentCPO Crude Palm OilDID Department of Drainage and Irrigation, MalaysiaDOE Department of Environment, MalaysiaEFB Empty Fruit BunchEIA Environment Impact AssessmentEMS Environmental Management SystemEQA Environmental Quality ActERT Endangered, Rare and Threatened speciesESA Environmentally Sensitive AreaFFA Free Fatty AcidsFFB Fresh Fruit BunchesFR Forest ReserveGM General Managerha HectareHCV High Conservation ValueHDPE High Density PolyethyleneIPM Integrated Pest ManagementISO International Organisation for StandardisationIUCN International Union for Conservation of Nature and Natural ResourcesJCC Joint Consultative CommitteeK PotassiumkW Kilowattm MeterMg Magnesiummm MillimeterMSGAP-OP Malaysian Standard Good Agriculture Practices-Oil Palmmt Metric tonneMYNI Malaysia National Interpretation N NitrogenNGO Non Governmental OrganisationOER Oil Extraction RateOSH Occupational Safety & HealthP PhosphateP & C Principles and CriteriaPK Palm KernelPOME Palm Oil Mill EffluentPPE Personal Protective EquipmentRHB Rashid Hussain BerhadRSPO Roundtable on Sustainable Palm OilSaOP Safe Operating ProceduresSdn Bhd Sendirian BerhadSEIA Social and Environment Impact AssessmentSg SungaiSGS Societe Generale de Surveillance SOP Standard Operating ProceduresSPC Senior Plantation ControllerStOP Standard Operating Procedures






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USECHH Use and Standards of Exposure of Chemicals Hazardous to HealthUMS Universiti Malaysia SabahWHO World Health Organisationyr Year






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EXECUTIVE SUMMARY

IOI Corporation Bhd has engaged SGS Malaysia Sdn Bhd to carry out an assessment of the company’s Pamol Sabah Plantation Unit for certification against RSPO P&C (MYNI) requirements. Pamol Sabah Plantation Unit comprises 6 estates covering a total of 13,464.5 ha. The assessment also covered operations of 51 mt/hr Pamol CPO mill located within the same plantation area. In average, the plantation unit produced approximately 300,000 – 350,000 mt of FFB per year and with a 21 % OER, the mill generated approximately 70,000 mt of CPO and 16,500 mt of PK annually.

An assessment of the Pamol Sabah was conducted by SGS Malaysia between 26 – 30 May, 2008 to evaluate current documentation and field practices in oil palm management of the plantation unit against the RSPO P&C 2007 and the MYNI 2008. A follow up visit was undertaken on 18 – 19 July, 2008 to verify actions taken to close out major gaps identified during the first field assessment. The company continued to provide management documents to the audit team thereafter, which was also incorporated into the findings tabulated in this report.

The assessment was conducted by a 5-member assessment team led by a SGS Qualipalm Lead Auditor with many years experience in the oil palm industry. Other team members include local experts knowledgeable in best management practices, environmental and social aspects.

The on-site assessment consisted of a systematic examination of documentation and management practices relating to the entire range of operations carried out in the plantation unit being verified. Field visits were undertaken to randomly selected field sites within the plantation as part of evaluating plantation practices. Plantation operations in active sites were also visited. The focus was on areas being harvested, replanting sites, nursery as well as locations where chemical spraying and manuring were being performed. Interviews and discussions with plantation workers as well as supervisors were conducted to gauge the level of understanding and knowledge on plantation management and operational aspects. Visits were also made to local communities to verify compliance to social requirements of the RSPO P&C.

The main assessment has resulted in the issuance of 19 minor and one major Corrective Action Requests (CARs). With the issuance of a Major CAR, the Plantation Unit was not recommended for certification.

As part of the certification process, a follow up visit was carried out, within 60 days from the main assessment, to evaluate actions taken to address the non compliances observed. The list of CARs issued (during the main assessment) and adequacy of actions taken to address them (close out CAR visit) are as tabulated below:

CAR # Indicator Nature of CAR/Close Out Details

01 2.1.4 System for tracking any changes in laws is inadequate.

02 2.2.2 Deer farm at Nangoh Estate may have infringed law on land title.

03 2.2.3 Boundary stones not clearly visible along the perimeter.

04 2.2.4 No documentary evidence that necessary actions has been taken to resolve the 20 acre land matter in Nangoh estate.

Close-out Details

The company has provided documentation, i.e. letter dated 12 June 2008 which adequately describes measures taken to resolve the 20 acres clinic area with






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the community. MINOR CAR 004 is closed

05 4.3.1 No slope maps indicating areas above 25 degrees.

Close-out Details

The company has provided slope maps for all the estates identifying and delineating areas with slopes of more than 25 degrees. MINOR CAR 005 is closed.

06 4.4.1 Riparian along small streams (anak sungai) not identified and marked for conservation in areas scheduled for replanting.

Close-out Details

The company has identified and allocated buffer zones along major rivers. Buffer zones for smaller streams have also been identified and buffers being establish where possible and there is a commitment to establish more buffers at the time of replanting. MINOR CAR 006 is closed.

07 4.5.4 Inadequate monitoring on the effectiveness of IPM system implemented.

08 4.6.1 SOPs are available together with CHRA but there is no written justification for use of specific chemical in specific activities, however the justifications have not been incorporated into SOPs.

09 4.7.1 Inadequate implementation and adherence to OSH procedures (e.g. lack of regular meeting between the company’s representatives and the workers).

010 4.8.1 Assessment of training needs inadequate.

011 5.1.1 No mechanism to review and update aspect and impact of risk assessment.

012 5.1.2 No specific improvement plan to promote positive impacts.

013 5.2.3 The management of the habitat for ERT does not have sufficient monitoring indicators for their conservation.

014 5.3.1 Uncontained waste produce leachate which are not being treated before they leave the factory and enter local water system.

015 5.4.1 No records of use of fibre in the boilers.

Close-out Details

The company has provided monitoring records of fibre usage in boilers in the mill for the month of June 2008 and there is a commitment to undertake this on a monthly basis. MINOR CAR 015 is closed.

016 5.6.1 Not all polluting activities outside regulatory requirements have been taken into consideration – activities related to the production of GHG.

017 6.1.1 No evidence of a documented social impact assessment carried out through consultation with affected communities.

Close-out Details






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At the time of close-out visit, and subsequently thereafter, the company has provide baseline documentation of a Social Impact Assessment (SIA) (non-restrictive format) for each estate, carried out through consultation with communities. The report contains basic social element description and identifies potential impacts and measures to mitigate such impact. MAJOR CAR 017 is closed.

018 6.5.2 Provision of maternity leave, allowance, sick pay and reimbursement of delivery cost are not adequately documented and disseminated.

Close-out Details

There is evidence of adequate documentation pertaining to dissemination of information related to maternity leave, allowance, sick pay and reimbursement of delivery costs dated 4th July 2008. MINOR CAR 018 is closed

19 6.8.2 There is evidence of discrimination based on gender and national origin pertaining to maternity allowance.

Close-out Details

• The company has adequate documentation on maternity allowances paid to foreign workers and has provided reasonable explanation as to the mechanism of payment for maternity allowances according to the Sabah Labour Ordinance.

• The management has revised the daily wage rates from RM10 to RM12 for women workers, which is now the same as that for the male workers (refer to company internal memo dated 30th June 2008: Revision of Total Daily Wage for Foreign Workers). MINOR CAR 019 is closed.

020 8.1.6 No mechanism to capture performance and expenditure in social and environmental aspects.

In summary, the assessment has resulted in the closure of one Major and six Minor CARs and thirteen minor CARs remain outstanding.

With no outstanding Major CAR, the IOI Corporation Berhad’s management of Pamol Plantation, (Sandakan), Sabah is now recommended for the certification against the RSPO P&C MYNI requirement. The issues highlighted as Minor CARs must be adequately addressed and the adequacy of the actions taken need to be verified during the first surveillance visit to be conducted within 12 months from the date of the main assessment.

Following procedures, the RSPO Audit Review Panel has reviewed the report and deliberated on the recommendation made by the certification body. Due to the complication with compliance with the state’s legal environment, the RSPO Board has approved the certification of the client with the following conditions:

a) The certification unit(s)/its supply base must have started the process of getting PMM/EIA approval from the Sabah EPD and evidence of having started must be submitted to the Secretariat (if not already done so).

b) that certified volumes of CPO and PK should exclude proportionate volumes for areas where EIA/PMM approvals are pending (the proportionate volume is to be computed as average yield of supply base as reported for the certification unit x area for which approval of PMM/EIA is pending).

c) that the certification be revoked if no PMM/EIA approval is received by the time of fist surveillance visit.

As such, the Board has recommended issuance of a Conditional Certificate to the client. The compliance to the conditions set must be evaluated during the first surveillance visit to be conducted by the certification body.






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Taking into consideration that there are a total of 1,165 ha of replanted palm since 2005 (the time the enactment of the Sabah EIA law), which forms about 10% of the total planted area, the available volume of sustainable crude palm oil and palm kernel from Pamol Sabah during the conditional certification period will be as follows:

Annual Crude Palm Oil Out (mt) Annual Palm Kernel Output (mt)

Est. Total Est. Output During Conditional Period


Pamol Sabah Mill 70,000 63,000 16,500 14,850






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INTRODUCTION

The purpose of this exercise was to evaluate the operations of IOI Corporation Berhad’s Pamol Estates in Sandakan, Sabah, Malaysia, against the requirements of the QUALIPALM Programme, the SGS Group’s certification programme for compliance to Roundtable on Sustainable Palm Oil (RSPO) requirements.

1. SCOPE OF CERTIFICATIONThe details of the Crude Palm Oil (CPO) mill and the oil palm plantations included in the scope of this assessment are presented in Table 1 and 2.

Table 1: Summary of CPO and PK production

Table 2: Summary of production area and annual production of Fresh Fruit Bunches (FFB) by Estates



Mill: Pamol Sabah Mill (July 2006 – June 2007)

Mill Location Capacity FFB input CPO out put PK Out put

Ulu Estate, Sandakan

GPS: E117.3912oN5.9967o51 mt/hr 320,000 mt ~ 70,000 mt 16,500 mt

Name of estate Location Production

(ha)

Annual production of FFBJuly 2006 - June 2007

(mt/ha)

Ulu Estate Sandakan 1,263 30.03

Bayok Estate Sandakan 1,524 28.14

Rungus Estate Sandakan 2,214 28.83

Tindakon Estate Sandakan 1,433 28.45

Nangoh Estate Sandakan 1,864 30.32

Meliau Estate Sandakan 2,706 31.58




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The Pamol mill in Ulu Estate only sourced FFB from the above mentioned group estates and likewise, the estates do not supply FFB to any external mills in the district.






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2. COMPANY BACKGROUND

2.1 Ownership

Pamol Sabah Estates are owned and operated by IOI Corporation Berhad, one of the top 5 plantation companies in Malaysia.

Legal ownership of the land area within the scope of this assessment as follows:

Table 3: Legal land ownership of IOI Pamol Estates

Estate Land Title # Registered owner Area (ha) Legal Purpose

Rungus Estate PL 08510998 Pamol Estate (Sabah) Sdn Bhd

2,274.5 Tobacco

Tindakon Estate PL08510999 Pamol Estate (Sabah) Sdn Bhd

1,865.0 Tobacco

Ulu & Bayok Estate

CL085310327 Pamol Estate (Sabah) Sdn Bhd

4,047.0 Agriculture

Nangoh & Meliau Estate

CL085325284 Milik Berganda Sdn Bhd* 5,278.0 Oil palm

* Milik Berganda Sdn Bhd is a wholly owned company under IOI Group

** Although the legal purpose stated for Rungus and Tindakon Estates is recorded as Tobacco, the company has informed the authorities concerned of the use of the land area for Oil Palm planting. The administrative process required to change the legal status is slow in Sabah. There is no legal infringement recorded.

2.2 Company Vision and Core Values

The company’s corporate vision and core values are presented below.

Corporate Vision

Our Vision is to be a leading corporation in our core business by providing products and services of superior values and by sustaining consistent long-term growth in volume and

profitability.

We shall strive to achieve responsible commercial success by satisfying our customers’ needs, giving superior performance to our shareholders, providing rewarding careers to our

people, cultivating mutually beneficial relationship with our business associates, caring for the society and the environment in which we operate, and contributing towards the progress of

our nation.

Source: http://www.ioigroup.com/corporateInfo/corp_vision.cfm



http://www.ioigroup.com/corporateInfo/corp_vision.cfm




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Core Values

In our pursuit of VISION IOI, we expect our people to uphold, at all times, the IOI CORE VALUES which are expressed as follows :

• INTEGRITYwhich is essential and cannot be compromised

• COMMITMENTas we do what we say we will do

• LOYALTYis crucial because we are one team sharing one vision

• EXCELLENCE in EXECUTIONas our commitments can only be realized through actions and results

• SPEEDor timeliness in response is important in our ever changing business environment

• INNOVATIVENESSto provide us additional competitive edge

• COST EFFICIENCYis crucial as we need to remain competitive

Source: http://www.ioigroup.com/corporateinfo/core.htm

2.2.1 Commitment to Sustainability

The company has a policy statement for sustainable palm oil production, committing to adopt good agricultural, environmental and social practices according to the requirements of the RSPO Principles and Criteria (RSPO P&C) in all their operating units. The policy statement is shown in Plate 1 below. In addition, the company is also committed to produce palm products of high quality in a safe and sustainable manner throughout their chain of operations. The policy is shown in Plate 2 below.

2.3 Company History

IOI Corporation Sdn Bhd is one of the largest oil palm plantation companies in Malaysia. The public listed entity is involved in upstream and downstream activities in the palm oil supply chain involving plantation management, milling of CPO, refining and the production of oleochemicals.

Over 25 years period of establishment, IOI has emerged to become a major player in the plantation industry sector and has chartered impressive growth in the expansion of planted area, revenue generation and improvement in productivity.

Major shareholders of the company are the founder family members (through Progressive Holdings Bhd), RHB Bank and the Employees Provident Fund Board.

Originally, established as a manufacturer of industrial gas in 1969, IOI Corporation ventured into the plantation business through acquisition of established plantation companies. The initial investment was by the acquisition of the 1,214 ha Bukit Dinding Estate in Pahang in 1983. By 1990, the group’s plantation holding had expanded to more than 45,000 ha mainly through the purchase of cocoa estates in Sabah.



http://www.ioigroup.com/corporateinfo/core.htm




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Pamol estates Malaysia and mills were acquired from Unilever Corporation in 2003. These estates were established in as early as 1960s and the Pamol Mill at that time was the largest in Sabah when it was made operational in 1967.

At present, IOI Corporation has a total of 167,295 ha of oil palm plantation of which 3,557 ha of the total area are in Sarawak, 51,158 ha in Peninsular Malaysia while the remaining 112,580 ha are in Sabah. The plantation holdings in Sabah is further divided into the Lahad Datu (77,435 ha) and Sandakan (35,145 ha) regions.

The company also has positioned itself as important player in the industry by expanding their oleochemical business by the acquisition of the Malaysia’s largest integrated oleochemical company, Palmco Holdings Bhd in 1997. Since then, IOI has also commissioned its own refinery in Sandakan.

While involvement in the oil palm industry is considered the Group’s anchor business, it is also a major player in property development.

2.4 Organisational Structure

Organisation and management structure of the Pamol Sabah group and Pamol mill are shown in Figure 1 and 2 below:






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Plate 1: Policy statement of sustainable palm oil






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Plate 2: Quality policy statement






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Figure 1: Management structure for IOI Pamol Sabah, Sandakan region (as of January 2008)

Figure 2: Pamol Sabah oil mill management structure






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2.5 Other Land Uses

Pamol group of estates are located within the Labuk-Sugut (also known as Beluran district) District in Sandakan division, Sabah. It was among the first oil estates that were established in Sabah that were developed from felling of natural forest in early 1960s. At present, the majority of the land use of the surrounding areas is also under oil palm cultivation owned by private companies and small holders. Meliau Estate borders Bidu-bidu and Ulu Tungud Forest Reserves which are managed by private sector concession holders for production of logs and conservation of forest resources.

The flood plains along the major river, Sungai Labuk are inhabited by local communities who also undertake oil palm cultivation and other agricultural activities. Parts of the plantation are traversed by roads connecting major towns within the vicinity. Sandakan is the major town and the main financial centre for the region.

3. PLANTATION MANAGEMENT SYSTEM

3.1 Bio-physical Setting

Sandakan is located on the east coast of Sabah and the land area is predominantly covered by forest. The land use pattern indicates limited urban area dominated by agriculture and forests. As part of an effort to eradicate poverty and increase the socioeconomic status of the rural communities, the Sabah government has embarked on an agriculture expansion programme resulting in a significant area being converted into oil palm cultivation since the 1970s.

i. Topography

The Sandakan region is undulating in nature with very limited flat lowland areas. The topography of the area is dominated by hills with moderate slope. Major portions of the Pamol estates are within low lying areas which are subjected to seasonal flooding. Sg Labuk that flows from Telupid to Sandakan is the main river system within the area. Tributaries within Pamol estates that flows into Sg Sugut include Sg Matapatan, Sg Padau Lawan, Sg Kamansi, Sg Meliau, Sg Wanyang and Sg Tungud. The landscape setting of the estates is shown in Map 1 below

ii. Ecology

The region is originally dominated with secondary forest with undulating topography. Floristically the natural forest can be classified as Parashorea tomentella/Eusideroxylon zwageri forest type and the major dipterocarp species are Shorea leptocladus, Dryobalanops lanceolata and Dipterocarpus caudiferous.

Secondary forest surviving in the region is important habitat for a number of RTE species such as pygmy elephant, proboscis monkey Orang Utan, tembadau (wild cattle), sun bear, clouded leopard etc . The area is also home to many other mammals (such as deer and pigs) and over 100 bird species.






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Map 1: Overview map of Pamol estates



Rungus

Ulu

Meliau

Tindakon

Nangoh

Bayok




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iii. Soil

Summarised below is the land suitability for agriculture in Sandakan region.

CLASS II Consist of 93,139 hectares. This class refers to soil with no limitation to agricultural development, and soils are suitable for wide range of crops.

CLASS III Consist of 44,184 hectares. This soil is suitable for a limited range of crops, with one serious limitation of agricultural development.

CLASS IV Consist of 52,828 hectares. This soil is considered marginally suitable of most agriculture crops, with more than one serious limitation to agriculture development.

CLASS V Consist of 22,110 hectares. This soil is not at all recommended for agricultural crops, with at least one very serious limitation to agricultural development.

iv. Climate

The estates’ annual rainfall from 2003 to 2007 is shown in Figure 3 below. Tindakon Estate records the highest rainfall compared to other estates with a mean annual rainfall of 4,300 mm over the 5 year period. The wettest year recorded for the past 5 years is in year 2003 with a total mean annual rainfall of 4,639 mm was recorded for all six estates whereas the driest year was recorded in 2005, where the mean rainfall was 2,886 mm. The mean annual rainfall for all estates over the 5 year period was 3,581 mm which shows that the area is suitable for oil palm cultivation.

Figure 3: Annual rainfall for each estate from 2003 to 2007






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The estates’ mean monthly rainfall distribution over a period of 5 years is shown in Figure 4 below. The wettest month recorded for all the estates over the 5 year period is in December with a mean of 635 mm and the driest month is in April with a mean of 120 mm. The mean monthly rainfall recorded for all the six estates over the same period was 298 mm, which shows that the area received adequate amount of rainfall throughout the year for oil palm cultivation.

Figure 4: Mean monthly rainfall for each estate from 2003 to 2007






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3.2 History of Use

The IOI oil plantation in the Sandakan Region is a result of acquisition of agricultural areas planted with other crops as well as existing oil palm plantation from other companies. IOI began their venture into Sabah by acquiring agricultural land already planted with cocoa in Sabah which was subsequently cleared and replanted with oil palm in 1997. IOI acquired Pamol Estates from Unilever in 2003. Pamol Sandakan is among the first oil palm plantation established in Sabah in 1960s. There has been no new establishment of oil palm plantation within Pamol Estates apart from re-planting.

3.3 Plantation Establishment and Management Process

The plantation profile is shown in Table 4 below. The total planted area for all the six estates is 12,169 ha of which 11,004 ha of the area is classified as having mature palms and the remaining 1,165 ha is still immature. Assessment routes and location of the six estates are presented in Map 2 below.

Table 4: IOI Pamol Estate hectarage statement

Hectarage Statement (ha)

Tindakon Rungus Ulu Nangoh Bayok Meliau

Mature areas

Over 25 years

16 to 25 years 354

16 to 24 years 1,307 155

11 to 15 years 126

8 to 15 years 2,706

6 to 25 years 1263

6 to 15 years 1985 1117 846

Below 16 years 367

Below 6 years 74 380 324

Sub total 1,433 2,214 1,263 1,864 1,524 2,706

Immature areas

Replanting

2005 82

2006 199 285

2007 74 73 257

2008 132 63

Sub total 74 272 417 0 402 0

Abandoned area

Forest area 8.03

Sub total 8.03

Infrastructure

SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com





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River 13.88 24.99

Roads 25.94 61.56 29.78 126.26

43.4 188.22

Housing & Building 12.54 57.14 1.47 26.04

Nursery 11.81

Football field 2.29 1.77 0.54

Vacant 3.1 7.61 0.61

Swamp 22.44 3.4 43.2

Pond & river 10.22 144.47

Oil mill 13.34

Eroded land 11.29 31.29

Airstrip 4.79

Golf course 16.34

Cemetry 0.75

Highway project 26.68

Quary site 5.1 0.53

Unplantable (swamp/ hills/ forest reserve) 249.85 77.86

Title encroachment/ highway project 84.61

Encroachment 55.24

Buffalo shed 0.46

Sub total 92 98.46 171.2 467.83 318.67 292.65

* Others (subject to re-survey) 19.65 32.34 16.4 52 34.17

Total 1,579.35 2,560.15 1,834.8 2,279.83 2,210.4 2,998.65* This category of areas within the legal boundary of the company’s land that is subjected to correction in the future mapping.

The company’s management process and operations are guided by the following documents (available from the Company upon request):

a. Group Standard Operating Procedures (StOP) for Estate Operations

b. Group Standard Operating Procedures (StOP) for Palm Oil Mill Operations

c. Group Safe Operating Procedures (SaOP)

d. Group Environmental Impact Assessment and Management Action Plans

e. Group Social Impact Assessment and Management Action Plans

f. Group Occupational Safety and Health Guidance for Estate Workers (in Bahasa Malaysia)






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g.

Map 2: Map showing location of estates and assessment routes

3.4 Production of CPO and Palm Kernel Oil

It is essential the FFB harvested be processed as soon as possible to prevent rapid rise of free fatty acids (FFA) which could adversely affect the quality of the CPO. The FFB harvested from within the estates are transported to the Pamol mill via trucks. Details of the transportation of FFB is as described under section 10 of this report.

The palm oil milling process involves the physical extraction of palm products; the crude palm oil and the palm kernel from the FFB. The process begins with the sterilisation of the FFB where the fruit bunches are steamed in the pressurised vessels to arrest formation of free fatty acids and prepare the fruit for subsequent processing.

The sterilised bunches are then stripped off the fruitlets in a rotating drum thresher. The stripped bunches or empty fruit bunches (EFB) and the waste products generated are transported to the plantation for mulching while the fruitlets are conveyed to the press digester.

In the digesters, the fruits are heated using live steam and continuously stirred to loosen the oil bearing mesocarp from the nuts as well as to break open the oil cells present in the mesocarp. The digested mash is then pressed, extracting the oil by means of screw presses. The press cake is then conveyed to the kernel plant where the kernels are recovered.

The oil from the press is diluted and pumped to vertical clarifier tanks. The clarified oil is then fed to purifiers to remove dirt and moisture before being dried further in the vacuum drier. The clean and dry oil (CPO) is ready for storage and despatch.

The press cake is conveyed to the depricarper where the fibre and nuts are separated. Fibre is burned as fuel in the boiler to generate steam. The nuts are cracked and the shell and kernel are separated by means of a winnower and hydro cyclone. The clean kernels are dried prior to storage.

The process of CPO and Palm Kernel oil production is presented in Figure 5 below.






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Figure 5: Palm oil processing flowchart






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FFB Yield

The total FFB production over a period of 5 years is presented in Table 5 below. There is an increase in production of FFB throughout the period, recording an increase of 64,217 mt. This commensurate with the increase in yield per ha over the same period.

Table 5: FFB production from July 2002 to June 2007

Metric tonne (July to June)

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Meliau 62,339.7 67,574.1 79,220.2 89,824.2 85,478.8

Bayok 37,397.2 38,639.3 43,949.5 47,034.3 41,178.0

Nangoh 27,571.3 31,379.8 37,743.1 39,961.1 45,003.1

Rungus 55,340.7 54,756.7 61,745.0 68,890.4 65,956.8

Tindakon 37,398.9 36,345.0 40,840.2 43,753.3 42,871.2

Ulu 35,736.3 38,986.5 45,927.4 44,424.1 39,512.5

Total 255,784.0 267,681.4 309,425.4 333,887.4 320,000.3

3.4.1 FFB Yield Per Hectare

The FFB yield per hectare trend for each estate is shown in Figure 6 below. The graph records a mean of 8.3 mt per ha increase in yield over the past 5 years. The current mean yield per ha for the 6 estates is 29.6 mt.

Figure 6: FFB yield per ha for each estate from June 2002 to July 2007






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3.4.2 Oil Extraction Rate

The oil extraction rate trend from July 2007 to June 2008 is shown in Figure 7 below. The mean extraction rate for the same period is recorded as 21.9 %.

Figure 7: Oil extraction rate from July 2007 to June 2008

3.4.3 Palm Kernel Production

The palm kernel production over a period of one year (July 2007 to June 2008) is presented in Table 6 below. The total palm kernel production for the same period is recorded as 16,589.41 mt.

Table 6: Palm Kernel production from July 2007 to June 2008

Month PK (mt)

Jul-07 972.20Aug-07 1,651.81Sep-07 1,922.21Oct-07 1,616.70Nov-07 1,931.43Dec-07 1,483.36Jan-08 1,397.88Feb-08 814.23Mar-08 1,031.01Apr-08 1,190.79May-08 1,312.33Jun-08 1,265.46Total 16,589.41






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4. SOCIO-ECONOMIC AND ENVIRONMENTAL CONTEXT

4.1 Social Aspects

Growth of the palm oil industry in Malaysia has been phenomenal. Beginning in 1920 with a mere 400 hectares of oil palm plantation, in 2007, the plantation area reached a staggering 4.3 million hectares making Malaysia the largest producer of palm oil in the world. In the same year, Malaysia’s output of palm oil exceeded 15.8 million tons or about half of the world production.

Sabah is the largest producing state for palm oil in Malaysia with approximately 1.2 million hectares of planted area in 2006 with production stands around 5.4 million metric tons of Crude Palm Oil (CPO) in the same year. About 50% of the total Sabah CPO production comes from Sandakan and the West Coast region, with total planted hectares of 690,000 in 2005 and growing particularly in the rural area of west coast of Sabah and Labuk Sugut.

Sandakan is a strategic location for the distribution of oil palm plantations around the district as well as from Labuk Sugut, Paitan and the west coast of Sabah. Currently, 40% of the total Sabah palm oil is exported through Sandakan port and the volume is expected to increase in the near future. In the context of international market, Sandakan also poised as strategic palm oil industrial centre especially serving markets such as Japan, Korea, Taiwan, China and Hong Kong.

Sandakan district covers a total land area of approximately 218,334 hectares. Since the founding of Sandakan in 1879 as a sparsely populated town with only a few shop-houses, it has now grown into a town densely populated with commercial centres and housing development mushrooming in every corner of the town and district as a whole. As with development in the commercial and industrial sectors, the socio-economic status of the Sandakan community is also experiencing positivr growth. The socio-economy of the Sandakan community has greatly been enhanced with the development of infrastructure and amenities in the region. The people of Sandakan now enjoy an adequate transportation system, medical facilities and good communication systems as well as other social facilities.

As Sandakan experiences rapid development both commercially and industrially, the population of Sandakan is also increasing at a rapid rate as more and more people from outside are attracted to the job opportunities, business opportunities and the lifestyle that Sandakan has to offer.

Between the period of 1960 and 1991, the population of Sandakan has increased from 45,296 people in 1960 to 223,432 people in 1990, which is almost five times the population of 1960. The Annual Mean Growth Rate between 1980 and 1991 was at a rate of 6.16%.

The increase in the total population in Sandakan can be attributed mainly to migration into the district not only from the rural to urban migration but also immigration of foreign nationals from the neighbouring countries such as the Philippines and Indonesia. The diverse economic development in Sandakan in the from of agriculture, timber, shipping, agro-industries and infrastructure has been the catalyst attracting many people into this region.

In Sandakan, where the agricultural industry still dominates other industries, the dependency on foreign force cannot be ignored for many years to come as this is a key component of sustainability. . The Sandakan region depends mainly on agricultural activities dominated by oil palm plantations. Approximately, 39% of the total land area of Sandakan district is planted with palm oil, which is about 45% of the total land suitable for agriculture. Apart from the oil palm plantations, other sectors that are considered labour intensive in the district are cocoa plantations, coconut plantations and rubber holdings,wood-based industries, fisheries and construction in the non-agricultural sector.

Other industries like the wood-based industry are also reported to be employing a large number of foreign labour.. It is reported that about 14% of the total foreign labour are employed in the 143 wood-based factories such as the plywood factory, sawmill factory and other wood related factories. The point to note is that, the plantation sector in Sabah is heavily dependent on foreign labour for current and future sustainability.

At the plantation site level, the Pamol group of estates in Beluran District consists of six estates and one mill with approximately 2059 workers, the majority of whom are migrant workers from Indonesia and the Philippines. Other stakeholders include local indigenous communities such as the Kadazan, Dusun and Orang Sungai as well as migrant communities such as the Illicano (Filipinos), Bugis and






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Cocos (see Table 7). There are about 15 villages with a total population of 2430 within and surrounding Pamol estate. Most of these communities live alongside each other along the Tungud and Labuk Rivers which run through Pamol.

These different communities generally live in harmony with each other. The indigenous peoples of the area were originally the Dusun and Orang Sungai. The advent of immigrants to the area was brought about when Pamol was established in the 1960s. The first migrants were the Illicano from Baguio City in the Philippines, followed by the Cocos peoples from the Cocos (Keeling) Islands, a territory of Australia. The Cocos were originally brought to Segama (Lahad Datu) to work in tobacco plantations in the 1940s. When the tobacco plantations closed down in the 1960s, Dato’ Davidson, the founding father of the Pamol estates brought the Cocos peoples to Pamol Beluran and gave each family 15 acres as incentive to work for the company. There is a Cocos Reservation today just at the periphery of Pamol. The majority of the local Dusun and Orang Sungai eventually moved about 3 km from Pamol as their livelihood (forest resources and river resources) were affected by the expansion of the Unilever Plantation.

Interviews with the local communities did not reveal any significant social problems in the region. The principal sources of employment are the estates and mills. The locals who used to depend on forest and river resources have also become oil palm smallholders, as a means of economic sustenance due to the dwindling forest resources in the region.

Table 7: Socio-Economic Profile of Villages within and Surrounding the Estates

Estate Village Population Ethnic Groups

Bayok Kampung Bayok, Kampung Klagan

248 Banjar, Tidung, Sungai, Dumpas, Dusun, Suluk and Bugis

Ulu Kampung Cocos, Kampung Tulongan, Kampung Ulu Lama

392 Kadazan, Dusun, Filipino (Illicano), Sino-Kadazan, Chinese, Banjar, Cocos, Bajau, Orang Sungai, Timur and Bugis.

PAMOL Palm Oil Mill

Kampung Rancangan Cocos, Kampung Tagas-Tagas

400 Kadazan/Dusun, Dumpas, Bajau, Cocos, Kagayan, Tidung, Tator, Iban, Chinese, Orang Sungai, Timorese and Bugis.

Rungus Kampung Rungus Lama

27 Kadazan and Bugis

Nangoh Kampung Rancangan Nangoh, Kampung Sinaputan, Kampung Nangoh

653 Orang Sungai, Bajau, Iban, Chinese, Suluk

Meliau Kampung Pinunukan, Kampung Rumidi Baru

311 Dusun, Chinese

Tindakon Kampung Terasak, Kampung Kimansi

399 Dumpas, Bajau, Manado, Kagayan, Tidung, Tator, Iban, Chinese, Orang Sungai, Timur and Suluk

4.2 Administration, Legislation and Guidelines

The following table lists the key national legislation, regulations, guidelines and codes of best practice that are relevant to the Malaysian oil palm plantation industry, environmental and social sectors.






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Table 8: National legislation, regulations, guidelines and codes of best practice relevant to the Malaysian oil palm plantation industry, environmental and social sectors

Criterion Related laws, regulations and guidelines

1.2 • National Land Code 1965• Federal Territory Land Rules, 1975• Johore Land Rules 1966• Kedah Land Rules 1966• Kedah Provisional Titles ( Transitional) Rules 1967• Kelantan Land Rules 1966• Malacca Land Rules 1966• Land Titles Rules ( Malacca) 1966• Negeri Sembilan Land Rules 1966• Pahang Land Rules 1966• Pahang Land Rules 1986• Penang Land Rules 1965• Land Titles Rules ( Penang) 1965• Perak land Rules 1966• Perlis Land Rules 1987• Sabah Land Rules 1930• Sarawak Land Rules ( Sarawak Cap.81)• Selangor Land Rules 1966• Terengganu Land Rules 1966

2.2 Sabah

• Land(Subsidiary Title) Enactment 1972-Sabah No.9 of 1972• Land Ordinance ( Amended Ordinance)• Land Acquisition Ordinance(Sabah Cap.69) Together with the subsidiary

legislation made there under• Land Ordinance Cap.6

4.3 • Land Conservation Act 1960• Street, Drainage & Building Act 1974 ( Act 133)

4.4 • MSGAP-OP 4.7.3.2,• DoE ( Water Quality Index),• Irrigation Areas Act 1953 ( Revised 1989)

Sabah

• Drainage & Irrigation Ordinance 1956(Sabah No.15 of 1956)• Sabah Water Resources Enactment 1998

4.5 • Destruction of Disease-Bearing Insects ( 1975)

4.6 • WHO Type 1A or 1B or Stockholm & Rotterdam Conventions,• Pesticides Act 1974(Act 149) and Regulations,• OSH Act 1994 ( Act 514) Regulations and Orders,• EQA 1974 ( Scheduled Wastes),• Use & Standards Exposure of Chemicals Hazardous to Health (• USECHH) Regulations 2000, CHRA• Poison Act & Regulations 1952• Malaysian Laws on Poisons & Sale of Drugs• Estate Hospital Assistants ( Registration) Act 1965

4.7 • OSH Act 1994

4.8 • Factories & Machinery Act 1967 ( Act 139) & Regulations and Rules

5.1 • ISO 14000 EMS






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5.2 • IUCN list• Wildlife Protection Act 1972• Wildlife Protection Act 1972( Revised 1976) & State Ordinances

related to this Act

Sabah

• Enakmen Biodiversiti Sabah 2000• Wildlife Conservation Enactment 1997

5.3 • Environmental Quality Act 1974 ( Scheduled Wastes),• Environmental Quality Act 1974( Act 127) and Regulations

6.1 • (Ref: Women & Family Development Ministry

6.2 • Aboriginal People Act 1954 ( Revised 1974)

6.4 • Children & Young Persons ( Employment) Act 1966

6.5 • Employment Acts ( 1955)• Employment Acts & Regulations ( Act 265) 2003• Employment ( Restriction )Act 1968• Private Employment Agency Act 1981• Employees Provident Fund Act 1951(Act 272)• Immigration Act 1959/1963 ( Act 155)• Workers’ Minimum Standards of Housing & Amenities Act 1990 (Act 446)• Employment Information Act 1953• Employees Social Security Act 1969(Amended 2003)• Workmen’s Compensation Act 1952(Act 273)• Estate Workers Minimum Standards Housing Act(1966)• Employment (Restriction)(Exemption) Order 1983• Employment Provident Fund Rules 1991• Workmen’s Compensation Regulations 1953• Wages Council Act 1947

Sabah

• Sabah Labour Ordinance6.6 • Trade Unions Act 1959

6.7 • Children & Young Persons ( Employment) Act 1966

6.9 • Sexual Harassment In The Workplace ( Guidelines)

6.10 • Sales Tax Act 1972 ( Act 64) & Regulations

7.1 • Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987),

Sabah

• Environment Protection Enactment 2002 Environment Protection (Prescribed Activities) Order 2005,

Sarawak

• Natural Resources and Environment (Prescribed Activities) Order 1994. ( Incorporating all amendments up to May 1997)

• The Natural Resources & Environment Ordinance (Cap.84-Laws of Sarawak 1958 ed.)

7.3 • Garis Panduan Pembangunan di Kawasan Tanah Tinggi, Kem. Sains, Teknologi dan Alam Sekitar, 22 Jun 2002.

• Environmentally Sensitive Areas (ESAs) Ranking in National Physical Plan

ESA component :----------------------------------------------------------------------------------------------------------------------------------------------------------------------SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com





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i) ESA Rank 1 – All protected areas, potential protected areas (wetlands, turtle landing sites), catchment areas of existing and proposed dams and all areas above 1000m.

ii) ESA Rank 2 – All other forests, corridors linking important protected areas, buffer zone around Rank 1 areas and all areas between 300m – 1000m.

iii) ESA Rank 3 – All marine park islands, buffer zone around Rank 2 areas, catchment areas for water intakes, areas for groundwater extraction (well fields), all areas between 150m – 300m, all areas with erosion risk greater than 150 ton / ha / yr, all areas experiencing critical or significant coastal erosion.

c. Management criteria for each ranking :

ESA Rank 1 – No development, agriculture or logging shall be permitted except for low-impact nature tourism.

ESA Rank 2 – No development or agriculture. Sustainable logging and low impact nature tourism may be permitted subject to local constraints.

ESA Rank 3 – Controlled development where the type and intensity of the development shall be strictly controlled depending on the nature of the constraints.






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5. OTHER OIL PALM PLANTATIONS OWNED BY THE COMPANY AND PLAN FOR CERTIFICATION UNDER RSPO P&CThe audit exercise was undertaken on the Pamol Estates, Sandakan. The list of other estates (by groups) is presented in Table 9, below. Provided too is the tentative dates planned for certification under RSPO P&C.

Table 9: List of other oil palm plantation owned by IOI and plan for certification under RSPO P&C

NAME OF THE PLANTATION MANAGEMENT UNIT:

Estates Size (ha) Location Other InformationPamol Sabah Oil Mill, Sabah (to be certified May 2008).

Meliau Estate. 2,998 Sandakan, Sabah

Bayok Estate. 2,210 Sandakan, Sabah

Tindakon Estate. 1,579 Sandakan, Sabah

Rungus Estate. 2,560 Sandakan, Sabah

Nangoh Estate. 1,834 Sandakan, Sabah

Ulu Estate. 2,331 Sandakan, Sabah

*Sugut Estate (certification under IJM Plantation Bhd oil mill)

713 Sandakan, Sabah 100% Crop sent to IJM Plantation Bhd oil mill.

Sakilan Oil Mill, Sabah (to be certified August 2008).

Sakilan Estate. 2,142 Sandakan, Sabah

Linbar 1 Estate. 2,458 Sandakan, Sabah

Linbar 2 Estate. 1,842 Sandakan, Sabah

Pamol Kluang Oil Mill, Peninsular (to be certified February 2009).

Pamol Barat Estate. 2,213 Kluang, Johor

Mamor Estate. 1,902 Kluang, Johor

Pamol Timur Estate. 2,167 Kluang, Johor

Swee Lam Estate. 1,234 Kluang, Johor

Unijaya Estate. 1,194 Kluang, Johor

Kahang Estate. 2,271 Kluang, Johor

Ladang Sabah Oil Mill, Sabah (to be certified April 2009).

Luangmanis 2505 Sandakan, Sabah

Terusan Baru / Mayvin 4 2118 Sandakan, Sabah

Moynod. 2804 Sandakan, Sabah

Laukin. 1998 Sandakan, Sabah

Sg. Sapi. 1220 Sandakan, Sabah

Labuk 1646 Sandakan, Sabah

Bimbingan 1. 1795 Sandakan, Sabah






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Bimbingan 2 1735 Sandakan, Sabah

Baturong Oil Mill, Sabah (to be certified June 2009).

Baturong 1 2,822 Lahad Datu, Sabah



Cantawan 1,452 Lahad Datu, Sabah

Gomali Oil Mill, Peninsular (to be certified February 2010).

Bukit Serampang. 2,725 Tangkak, Johor

Gomali. 3,595 Segamat, Johor

Sagil. 2,518 Tangkak, Johor

Paya Lang 1,476 Segamat, Johor

Tambang. 2,020 Segamat, Johor

Reagent Estate. 2,313 Tampin, N. Sembilan

Kuala Jelai. 678 K. Pilah, N. Sembilan

Bukit Dinding. 1,660 Bentong, Peninsular

Bahau. 3,028 K. Pilah, N. Sembilan

Bertam Estate 734 Melaka.

Mayvin Oil Mill, Sabah. (to be certified April 2010).

Mayvin 1. 1,509 Lahad Datu, Sabah

Mayvin 2 / 3. 1,657 Lahad Datu, Sabah



Tangkulap 2,192 Lahad Datu, Sabah

Syarimo Oil Mill, Sabah. (to be certified April 2010).

Syarimo 1 1,836 Lahad Datu, Sabah














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Morisem B Oil Mill, Sabah (to be certified June 2010).

Tas 1,168 Lahad Datu, Sabah

Halusah. 760 Lahad Datu, Sabah

Morisem 1 1,919 Lahad Datu, Sabah

Morisem 2 1,892 Lahad Datu, Sabah

Morisem 3. 1,886 Lahad Datu, Sabah


Leepang 2. 2,003 Lahad Datu, Sabah


Leepang 4 1,388 Lahad Datu, Sabah

Bukit Leelau Oil Mill, Peninsular (to be certified March 2011).

Bukit Leelau Estate. 2,096 Pekan, Pahang

Merkassar Estate 1,216 Pekan Rompin, Pahang

Merchong.Estate 1,952 Pekan, Pahang

Detas Estate. 2,301 Pekan, Pahang

Pukin Oil Mill, Peninsular (to be certified March 2011).

Leepang A Estate. 2,404 Rompin, Pahang

Laukin A Estate. 1,620 Rompin, Pahang

Shahzan IOI. 3,204 Rompin, Pahang

Segamat Estate. 1,946 Segamat, Johor

Pukin Estate. 2,437 Pekan Rompin, Pahang

Leepang Oil Mill, Sabah (to be certified April 2011).

Permodalan 1. 2,131 Lahad Datu, Sabah












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Rinwood Pelita, Miri (to be audited by certification unit concerned)

*Sejap Estate Total 5,000 ha

Planted 1,863 ha

Baram, Sarawak 100% crop sent to Boustead & Rimbunan Hijau oil mill

*Tegai Estate Total 4,040 ha

Planted 1,694 ha

Baram, Sarawak 100% crop sent to Boustead & Rimbunan Hijau oil mill

Harita Group, Indonesia (legal proceedings are still on-going, audit to be done after acquisition)

PT Kalimantan Prima Agro Mandiri (PT KPAM)

20,000

Kalimantan, Indonesia

PT Berkat Nabati Sejahtera (PT BNS)

13,500 Kalimantan, Indonesia

PT Sukses Karya Sawit (PT SKS)


PT Bumi Sawit Sejahtera (PT BSS)


PT Ketapang Sawit Lestari (PT KSL)


Work has not yet started, land legality permits are in the process.

*Estates marked will be certified through the mill where the FFB are being sent to. This is in line with the definition of certification unit under RSPO.

IOI as one of the main player in the oil palm industry in Malaysia has made commitment to bring all of its holding to RSPO certification latest by 2011. With a reasonable number of certification units to be prepared, SGS considers the plan is challenging but with the commitment shown by the management, such of a plan is considered as achievable. As part of meeting RSPO certification requirement, SGS will monitor and record the progress of the plan in the surveillance report be prepared for Pamol Sabah.

A few IOI plantations that are supplying FFB to other mills are being managed in the same manner as other estates under the group and will be subjected to evaluation through certification process of the relevant mills. The company also makes commitment that any new land development will follow RSPO requirement and subjected to good agricultural practices and the necessary legal requirement at every step of its process.

6. STAKEHOLDERS NOTIFICATIONA wide range of stakeholders were contacted 4 weeks before the planned evaluation to inform them of the evaluation and ask for their views on relevant oilpalm plantation management issues. These included environmental and social interest groups, local government agencies and authorities as well as workers’ unions. The full list of stakeholders that were contacted is available from SGS. Responses received and comments are recorded in attachment 2 of this Report.

7. PREPARATION FOR THE EVALUATION

7.1 Schedule






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The assessment of Pamol Sabah was preceded by a 2nd party evaluation by SGS during May 2007. This examined the management systems and identified any gaps in the system against RSPO P&C generic requirement. Information gathered was also used to plan the main evaluation. Key stakeholders were identified.

7.2 Team

Table 10 below provides the details of the audit members involved in the main evaluation.

Table 10: Summary of team member’s experience

Evaluation Team Notes

Lead Auditor Kishokumar Jeyaraj, has post graduate degree in Forestry and landuse. Is an expert in natural resources management planning, mapping and stakeholder consultation. Trained as ISO 14000 lead auditor and has been involved in certification and verification of forestry, environmental and oil palm industries for more than 15 years. Has completed RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia and Indonesia.

Team Leader Salahudin Yaacob has post graduate degree in Environment and Natural Resources management currently head Natural Resources certification programme in SGS Malaysia. Trained as a botanist, the team leader has gathered more than 10 years of auditing especially in the forestry sector. As a lead auditor in forest management and chain of custody of forest products, he is well versed in certification process and management of certification scheme. Has participated RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia.

Plantation / Ecology

Tunku Nazim Tunku Yaacob is a graduate in Ecology with more than 30 years experience in ecology and wildlife management. Tunku is a trained ISO 14000 lead auditor and expert in landuse and management planning. Has gathered many years experience of auditing in forest management and other natural resources sector at national and international levels. Has attended RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia and Indonesia.

Social Specialist Savinder Kaur has a post graduate degree qualification in Engineering and currently a PhD candidate in social studies. She has been involved with social studies particularly involving indigenous community and environment since the last 7 years. Is an experience social auditor in natural resources planning, forest management certification under various schemes as well as conducting verification of plantation companies against RSPO requirement.

Documentation Specialist

Oi Soo Chin is a graduate in Forestry discipline and undergone lead auditor training under ISO 14000. She has been involved in certification and verification for more than 3 years both in Malaysia and Indonesia.

8. THE EVALUATIONThe Main Evaluation was conducted in the steps outlined below.

8.1 Opening Meeting

An opening meeting was held at the conference room in Guest House Complex at Ulu Estate. The scope of the evaluation was explained and schedules were determined. Records were kept of all persons that attended this meeting.

8.2 Document Review






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A review of the main plantation management documentation was conducted to evaluate the adequacy of coverage of the QUALIPALM Programme requirements. This involved detailed examination of policies, management plans, systems, procedures, instructions and controls.

8.3 Sampling and Evaluation Approach

During the 4 days field evaluation, the audit team covered all six estates and the CPO mill within the scope of this assessment. Management documents both at the group as well as the estate levels were reviewed. Standard operation procedures documented for the estate and the mill operations were also reviewed. Records of production, report, training etc were inspected..

The audit team visited various operation sites such as replanting, manuring, pesticide application, harvesting, environmental sampling, buffalo breeding etc.

Discussions were held with the top estate managers as well as ground staff. Interviews were also held with workers and local communities living in and around the area.

8.4 Field Assessments

Field assessments aimed to determine how closely activities in the field complied with documented management systems and QUALIPALM Programme requirements. Interviews with staff, operators and contractors were conducted to determine their familiarity with and their application of policies, procedures and practices that are relevant to their activities. A carefully selected sample of sites was visited to evaluate whether practices met the required performance levels.

As part of effort to cover more areas, the verification team sometimes split and worked independently. The areas visited on daily basis is provided in Table 11 below.

Table 11: Assessment schedule

Date Area visited Notes

26 May, 2008 Document review Documents for review were made available.

Opening meeting Briefing on each estate and each mill were given by the respective manager.

Visit to the Pamol Mill Receipt of FFB, Mill operation, Mill design, OSH aspects, POME, EFB, CPO productionEnvironmental monitoring records, Licensing

27 May, 2008 Visit to MeliauVisit to Nangoh

Areas covered include harvesting area, chemical storage, replanting, waste management system etc.

Verification of plantation boundary along Ulu Tungud FR.28 May, 208 Visit to Rungus

Visit to TindakonAreas covered include clinic, local communities, educational forest areas, riparian etc.

Verification on the location and effectiveness of tidal gate.29 May, 2008 Visit to Bayok

Visit to UluAreas covered include manuring, pesticide spraying, harvesting using buffalo, buffalo breeding programme, nursery area etc.Boat ride along Sg Tungud to verify results and recommendation made by water quality monitoring report.

Closing meeting Preliminary results of the assessment exercise were presented to the IOI management.

30 May, 2008 Audit team leaves the plantation18 - 19 July, 2008

CAR close out Field visit to Pamol Estates, Sandakan to close CARs.Document review and site visits.

1 Aug, 2008 SIA report submitted to the audit team for review






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8.5 Summing Up and Closing Meeting

At the conclusion of the field evaluation, preliminary findings were presented to company management at a closing meeting. Any areas of non-conformance with the RSPO requirement were raised as one of two types of Corrective Action Request (CAR):

Major CARs - which must be addressed and re-assessed before certification can proceed

Minor CARs - which do not preclude certification, but must be addressed by the following surveillance, otherwise will be raised as a Major.

A record was kept of persons that attended this meeting.






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9. EVALUATION RESULTSThe summary of the evaluation findings relevant to indicators listed in MYNI 2008 are provided in this section. The raising of Major and Minor CARs are highlighted under the respective criteria and summarised as tabulated in Attachment 1.

PRINCIPLE 1:PRINCIPLE 1: Commitment to transparencyCommitment to transparency

Criterion 1.1 Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation on decision making.

Findings Pamol Estate management maintain a list of stakeholders that are relevant in the estate management. The same list is made available to the audit team and is used for in the stakeholder consultation process.

There is a mechanism to ensure that documents are publicly available, as stipulated in the individual management plans. Website provides adequate information.

Criterion 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

Findings There is a mechanism to ensure that documents are publicly available, as stipulated in the individual management plans.

o Land titles / user rightso Safety and health plan o Plans and impact assessments relating to environmental and social

impactso Details of complaints and grievances o Negotiation procedures o Continuous improvement plan

There is adequate documentation of records of complaints and grievances available in each of the estates and the mill. Similarly, the negotiation procedures are clearly documented and presented in the individual management plans. The estate also maintain adequate documentation of grievances which have been resolved.

PRINCIPLE PRINCIPLE 2:2: Compliance with applicable laws and regulationCompliance with applicable laws and regulation

Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations.

Findings There is a complete register of laws and regulations, available at all estates and mills. The Managers have demonstrated adequate knowledge of the national laws and state ordinances, especially pertaining to OSH and labour related legislation.

Company OSH and staff/worker management is based on: Sabah Labour Ordinance (Sabah CAP.67); All relevant laws related to OSH; Immigration Act 1959/63 (Act 155); Industrial Relations Act, are general complied with. Legal environmental requirements are also in place.

All necessary renewable permits pertaining to crop production and milling are in place and displayed in the form of certificates in the group offices and respective mills. Legal requirements for machinery maintenance and power generation have also been






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complied with. Workers health requirements and pesticide regulations have also been fulfilled.

There is a complete register of relevant national laws and regulations, available at all estates and mills. The relevant laws have been systematically addressed and individual files tracking compliance exist. Current procedures are generally acceptable. List and copies of relevant national laws were viewed at each estate. The list also included relevant international laws and conventions ratified by the Malaysian government. However, the list given in the Internal Group Environmental Management & Monitoring Plans was considered incomplete.

Managers have demonstrated adequate knowledge of the national laws and state ordinances, especially pertaining to OSH, labour related legislation and environmental requirements. Evidence of implementation is shown in the form of circulated memos, documentation management procedures and estate practice.

The estate and mill managers have been given the task of implementing legal requirements on site. Tracking changes in laws is seen as a corporate task handled by the company’s headquarters and the relevant changes are passed on to individual estate managers in the form of memos or instructions to modify or change. However, system for tracking any changes in laws is considered inadequate (Minor CAR-01). The system to track changes was not considered sufficient to cover all federal laws and state enactments that are related to estate activities. The system to track changes has only been developed over the audit period and is yet to be tested and supportive of tracking changes in legal requirements in all aspects related to the plantation industry.

General observations and interviews at the estate and with surrounding communities produced no examples of non-compliance of laws enforced. There is evidence of compliance with most legal requirements. However, there are some examples where the estates have acted without checking whether their actions were within their legal rights. This included:

• Timber being taken from an adjacent forest reserve where estate boundary markers had not been maintained (see 2.1.3 below).

• Historical planting up to the edges of streams.

Also , there is no evidence of written permission from the Sabah Labour Department for documentation purposes for the introduction of new dimensions pertaining to levy deductions wages and other aspects of employee’s welfare (see 6.5.2) but the issue has since been resolved.

Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.

Findings Legal ownership of the land within Pamol estates are tabulated under Table 3 of this report. All estates evaluated have been purchased and already have a history of more than 30 years of establishment. Land titles explicitly state the land is to be used for ‘oil palm’ –confirmed by observation. Buffalo rearing is considered an integral part of oil palm cultivation.

The ‘deer farm’ at Nangoh was not mentioned from the terms stated in the land title and though the deer farm had been approved by the state wildlife authorities, it has not been endorsed by the state land authorities (Minor CAR 02). The term ‘deer farm’ implies a separate agricultural venture outside the expressed conditions of the land title.

There is no evidence of current land use conflict nor local community disputes.

Legal boundary markers exist for all estates and all estates have had their boundary mapped by the company using a 1 metre differential Global Positioning System (GPS).

The estates have the capability to locate all boundary marker sites. Cadastral maps ----------------------------------------------------------------------------------------------------------------------------------------------------------------------SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com





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were viewed which indicate the absolute positions of the original ground pegs. At least two of these have been located by the Global Positioning System (GPS) field team at Nangoh Estate. This team is equipped with GPS tools to undertake surveys with an accuracy acceptable to JUPEM (Jabatan Ukur dan Pemetaan, Malaysia- National Survey and Mapping Department).

Not all the original boundary markers have been located along estate boundaries, especially the forest reserve boundary (Minor CAR-03). Should these markers have been located and maintained at Meliau Estate, conflict with forestry regulations could have been avoided.

There is no documentary evidence showing the necessary action taken to resolve the local community request for the release of 20acres of land at Nangoh Estate for infrastructural development for the local community of Nangoh Sub-District, which includes a new clinic (see also indicators 6.2.3 and 6.3.2)

Surrounding local communities, through their village committees and local representatives have requested the company to allocate 20 acres of land for development of a clinic. The community has sent at least five letters and organised a meeting between IOI representatives and the community to discuss the status of their request. To date, there is no documentation from IOI showing the company’s response to the request, although there is evidence from an interview with the local community leader that the company has asked the local community to seek the permission from the District Office before the company can take necessary action (Minor CAR-04).

During the close CAR visit, it was observed that the company has provide the documentation, i.e. letter dated 12 June 2008 which adequately describes measures taken to resolve the 20 acres clinic area with the community. MINOR CAR 004 is closed.

Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

Findings All estates evaluated have in their possession details maps of the plantation extent. Pockets of local community land have also been identified. In Pamol estates, there are areas set aside as conservation areas where a landscape estate extent is provided.

The company has made effort to trying to re-designate riparian strips in the the estates. There is also a policy to re-establish riparian reserves in block adjacent to rivers. The local riverine communities will be allowed to use these areas for subsistence as an informal recognition of their customary rights.

No records of disputes exist as all the estates were bought in a developed state. It is not known if the previous owners had resolved any previously arising issues fairly. Currently no serious customary or legal use rights disputes evident

There is anecdotal evidence that the company has taken reasonable measures to avoid damage to other peoples’ use rights, property, resources or livelihoods. The company does not disallow the local communities living within their boundaries to reside or utilise the natural resources as well as infrastructure within the estates.

Only in the PAMOL group of estates are there local community settlements. The estates have a 40 year history of establishment it is evident that the local community is generally happy with the oil palm estates and there is no evidence of any serious disputes eventhough there is no evidence of participatory mapping conducted. This minor weakness is linked to criteria 6.1.1 and 8.1.4.






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PRINCIPLE 3:PRINCIPLE 3: Commitment to long term economic and financial viabilityCommitment to long term economic and financial viability

Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability.

Findings Plantation management documents covering the next 5 years is available describing, among others the following elements: planting material, crop project and yield trends, mill extraction rate, and budgeted production costs. Each of the estates and mill have identified the items and drawn up a budget to cover their operational needs for the next 5 years.

Information on crop sales and sale prices, and financial liabilities for the estates and mill were not available at the respective locations. Such information would be available in the Annual Report which is externally audited.

Ten year replanting programme for each estate are available.

Plantation management plan also exists in the form of maps for each estate. The maps indicate the boundary of the estates as well as the blocks or the compartment. The rivers and streams within the estates were marked together with the access road.

The annual plan is only in the form of annual budget determined by the Headquarters for each estate. The budget include allocation for the operation, estimate on expenses for harvesting, social programmes as well as possible environmental safeguards.

In summary, commitment to long term economic is demonstrated by the following:

• Annual operations and improvement budget for all operations at the estate level. The budget details planting, maintenance and fertilisation programmes and associated cost involved. The annual budget also includes details of general estate maintenance. Workers facilities upgrade and new developments are also captured in the annual budget.

• The estates have a 10 year replanting programme which is adhered to and taken into account in the respective annual budget.

• Crop production is monitored on a block by block basis for individual estates and a feedback mechanism is in place to analyse crop production trends supporting continuous improvement.

• Internal agronomic visits undertaken by the research division of IOI on a biannual basis to determine crop production efficiency for each individual estate is a firm commitment to long term economic and financial viability. The focus is on optimising crop production through sustained methods. The agronomic internal assessment includes analysis of yields, foliar nutrient, nutrient conservation, systematic soil survey and analysis, pest damage control, erosion control, fruit setting, general health of the crops, etc. Site management benefits from improvement recommendations targeting fertilising, pest management and general field maintenance. Agronomic reports are circulated to individual estate management for implementation. The agronomic recommendations also help support the formulation of the annual budget to promote sustainability.

• Occupational safety and environmental risk assessment with associated planning and implementation is also a dimension added to improve long term economic and financial viability.

A general indicator of IOI’s commitment to long term economic sustainability is the continuous yield increase in their mature areas in the estates evaluated. This is an indication of sustained viability and commitment to improvement.






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PRINCIPLE 4:PRINCIPLE 4: Use of appropriate best practices by growers and millers:Use of appropriate best practices by growers and millers:

Criterion 4.1Operating procedures are appropriately documented and consistently implemented and monitored

Findings Procedures were documented at group level and then translated into StOPs for individual estates where needed. Procedures exists for most operations both in the estates and mills in the form of written documents. The StOPs covering elements mentioned in criteria 4.2-4.8 are sufficient to ensure consistent implementation. The StOPs reflect best industry practices as detailed in IOI’s agricultural policy document.

StOPs for crop production and field maintenance are consistently implemented in all the estates evaluated. Where field management is concerned, the operating procedures have become standard practice understood by all field management staff. Procedures for the whole crop management cycle are provided to all management staff and training provided to ensure standard and consistent implementation. Input from the research division for continuous StOP review and improvement demonstrates the implementation of an adaptive management approach.

A comprehensive monitoring framework is in place, especially for field operations is in place. The general estate/mill management hierarch ensures that relevant procedures both in the estates and mill are implemented. The management structure of all the estates and mills ensures that procedures are effectively implemented and monitored. General monitoring is in the form of task supervision and satisfactory task completion reports to senior management in individual estates and mills. A series of daily task completion forms serving as monitoring documents exist for all important field and mill operations. These serve as records of implementation and monitoring. Procedures for environmental monitoring exist and the same level of management control is placed on these procedures.

Criterion 4.2Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield.

Findings In all the estates evaluated there has been a high standard of soil fertility maintenance implementation that meets normal industry practice of ensuring optimal nutrition for planting material according to soil type and climate. Fertilizer inputs are monitored.

Measures taken that contribute to soil fertility include: use of buffalo and wide wheel carts create relatively little soil compaction; tolerating soft weeds during the life of the palms and conserving organic matter at replanting; applying fertilisers to frond stacks.

Examples of soil fertility maintenance is attempted through the following procedures:

a. Inter-row frond heap stacking to ensure organic matter enrichment of the soil. The frond stacks decay at a natural rate and not only ensure that nutrients are slowly returned to the soil but also ensure soil structure is maintained by organic matter input. Oil palm root masses are concentrated under the frond stacks.

b. Fertilizer application is not within the individual palm circle but on the inter-row frond stacks. This ensures that wash of fertilizer is minimised as it is protected from the elements by the frond stack. The fertilizer granules penetrate the frond stacks initiating a slow release mechanism. The frond stacks are devoid of competitive weeds and the root mass beneath the frond stacks increases nutrient absorption by the roots of individual palms.

c. Empty Fruit Bunches (EFB) application around the circles of immature palms provides primarily potassium and phosphorous in smaller quantities. The EFB application also serves to increase pH marginally and soil moisture retention is ensured. EFB application in mature fields undertaken in estates with marginal soils. Planting blocks with poorer soils or with low yields are subjected to EFB applications. Besides nutrients, EFB application also






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serves to:

• Increases soil organic matter content. • Improves soil structure. • Increase infiltration and aeration. • Reduces run-off. • Improves soil water retention. • Increases soil micro fauna activity. • Increases cation exchange capacity. • Reduces soil temperature fluctuation

d. In replanting areas, the zero burning policy and its implementation has promoted windrowing and chipping of old palm trunks ensuring organic matter and nutrient retention in the fields.

e. Palm oil mill effluent (POME) is also applied to fields adjacent to Palm oil mills. The POME is a source of Nitrogen, phosphorous, potassium and Magnesium. The practice of returning nutrient to the fields is demonstrated by POME and EFB application.

f. Legume cover-crop (LCC) establishment in replanting areas promotes nitrogen fixing and this activity persists until the cover is shaded out by canopy closure.

The above supplement the periodical application of inorganic, magnesium, nitrogen, phosphorous and potassium. Trace elements are applied in selected fields with deficient soils.

Check on nutrient status in the field is undertaken by foliar (frond) sampling supported by soil nutrient status analysis. This is done at the very least annually to establish nutrient uptake by the palms and also to determine the annual fertilizer application recommendations. The monitoring results are presented in the form of a fertilizer recommendation report for each estate. IOI’s agronomic unit under the research division systematically undertakes monitoring and recommends changes to improve soil fertility to ensure optimal and sustained yield.

Criterion 4.3 Practices minimise and control erosion and degradation of soils.

Findings Soil management types mapped and mechanical properties understood by the estates. Items listed under the Malaysian National Interpretation (MNI 2008) are covered by the StOPs and were observed to be consistently applied throughout the estates, except for those noted below.

Soil erosion is significantly minimised in all the estates evaluated. The following are implemented:

a. In replanting areas the original stand is felled and chipped and left in the field to provide ground cover. Rapid Legume Cover Crop (LCC) establishment is a priority to reduce soil exposure to rain. In areas where LCC establishment as in difficult, the practice is to delay inter-row spraying to maintain weed vegetation cover to prevent soil erosion, only circle weeding is done. More rigorous weed control is undertaken once steps to LCC establish is more extensively is successful.

b. In mature areas, the policy is to maintain non competitive “soft weeds” in the inter-rows to maintain ground cover. Frond heap stacks and “soft weed” rows (harvester paths) provide a significant ground cover minimising exposed extent of soil. EFB mulching both in replanting and mature areas also act as erosion control measures. Non competitive “soft weeds are also maintained in bare areas as a form of erosion control.

c. In areas having greater than 15˚slopes, contour terracing has been implemented where possible and frond stacking along the contour terrace edges makes erosion control more effective. The general practice of bunding






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in terraces is also in place.

d. Roads are maintained and compacted on a regular basis. The existence of an annual road maintenance budget ensures that roads do not become a source of erosion in all the estates.

e. The policy of maintaining buffers along water courses has been adopted and phased implementation has been observed. The PAMOL group of estates have not only maintained of pockets of original vegetation along rivers as conservation areas but also have systematically creating buffer strips along all major water courses at the time of replanting. This is a policy that is being effectively implemented. Buffers along water courses are protected to prevent bank erosion.

f. Soil mapping undertaken in all the estates serves as erosion risk mapping as different soil types have different erosion potential. Individual estates have used this information to develop varying management responses to erosion control.

g. Road maintenance programme are outlined in estate documents. Observations suggest work schedule and execution effective, and equipment maintained in a proper working state.

The techniques recorded above are part of standard estate practice. Implementation is monitored through systematic task completion in individual estates. The monitoring is continuous activity which is linked to budget control.

Even though there is topographic information of the estates, slope maps over 30m length have not been generated to indicate where slopes exceed 25°( as mentioned in guidance for Sabah) (Minor CAR-05). Such areas need to be identified, mapped and marked on the ground prior to replanting. However it was observed that there are areas that have been identified to be steep and also having very friable soils that are not planted and original vegetation (secondary forest) covers are maintained. Though riparian areas along major stream ways have been identified and mapped, natural streams under 1 m width have not been surveyed, mapped or marked on the ground, and such areas have not been identified for restoration ( as mentioned in item 10. of the MNI2008).

During the close CAR visit, the audit team was given evidence that the company has produced slope maps for all the estates identifying and delineating areas with slopes of more than 25 degrees. MINOR CAR 005 is closed.

Criterion 4.4Practices maintain the quality and availability of surface and ground water

Findings The estates visited have minimum impact on water resources in their respective locations. All the estates are located in high rainfall areas with abundant surface water. In fact PAMOL estates are in flood prone area and thus the question of water management is one of flood management. The estates have adequate hydrological knowledge and appropriate measure have been taken to mitigate flooding impact. Poor site selection cannot be attributed to current ownership and management. The current management practices demonstrate the ability to adequately keep fields drained without negative impacts and sustain crop production. For alluvial soils, riverine buffers have been given for main rivers. Tidal areas protected by flood gates that controls water flow rate and reduces bank erosion. Main rivers continue to erode and develop oxbow lakes. In some area the original riverine buffers have been eroded and palms are being lost. The potential extent of the ox-bow erosion areas has not been mapped, and has not been noted where it exceeds prescribed buffer widths of 50m or 20m.






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Riverine buffers of 50m or 20m have been given for large and medium sized rivers in accordance with Sabah Water Resources Enactment , 1998 for water ways with a width greater than 3m. These areas have been mapped, they have not been planted and in some cases they have been identified as HCV 4 areas for conservation management.

Monitoring is done according to a StOP and chemical analysis according to standard protocols. Water quality monitoring records were viewed and selected sampling points visited in the field. An example of how these monitoring records are used for management comes from Meliau Estate. There, comparison can be made between water quality entering and leaving the estate. It was noted that E. coli and mineral oils increased in out-going water. The estate has now banned washing vehicles in natural waterways.

One weakness that was observed was that results or stream water analysis returned to the estate indicate assessment is accepted without question (dissolved oxygen levels unexpectedly high where the results should have been queried). Water monitoring results are not accompanied with notes on thresholds that would prompt a management response.

Field workers have been trained not to apply fertilisers and spray up to the edge of streams. Observations indicate that sprayers have not fully understood spraying instruction and on occasion, spray up to the edge of waterways.

Riparian along small streams (anak sungai) however was not adequately identified and marked for conservation in areas scheduled for replanting (Minor CAR 06). The natural streams that have not been mapped are assumed to have a width of less than 3m. However, field observations suggest that this may not always be the case (Nangoh blocks 00K and 93A). Without full knowledge of the streams in each estate, managers cannot ensure they are consistently in compliance with the enactment.

During the close CAR visit, the company provide evidence that the buffer zones along major rivers have been adequately identified on the map. Similarly, buffer zones for smaller streams also have been identified and buffers being establish where possible and there is a commitment to establish more buffers at the time of replanting (MINOR CAR 006 is closed).

Attention also need to be given to the mill particularly at the EFB receipt area where wash water transporting spillages and leaks, and run off from the EFB yard are drained to waterways without monitoring or appropriate treatment. Downstream of the mill and fields are riverine HCV areas. These are considered as protected areas. The impact of untreated runoffs on these areas have yet to be assessed and subjected to appropriate mitigation measures with relevant stakeholders.

Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

Findings In all the estates evaluated, elements of IPM have been observed. Pest and weed infestation is recorded as minimal in these estates. The introduction of biological control is being promoted and the use of Barn Owls for rat control is also being investigated. Some attempt has been made to establish beneficial predator and parasitoid host plants e.g. Tunera subulata, Cassia cobannensis, Antigonon leptopus, Averrhoa carambola. Grazing by buffalo reduces chemical usage in the field as the animals consume the weeds. Buffalo grazing in the inter-rows is seen to be effective in the PAMOL estates. IOI is investigating the full implementation of IPM and a phased approach has been taken.

Estate management staff is aware of the toxicity indices for all pesticides used in the estate and appropriate briefing and training regard this is given.

The Internal Group Environmental Management & Monitoring Plan outlines the






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approach to IPM. This covers weeding, diseases and pests management. An adaptive management approach is taken. Biological control methods are employed, with routine field monitoring where a census is taken of indicator species. When tolerance thresholds are breached, a chemical response is initiated. Census records viewed.

StOP are available for the control of all major pests and have been consistently implemented. See 4,5,1 above. Records of application were viewed and field visits maid confirming application was made according to current schedules. Records of chemical usage are available for both mature and immature palms in the form of measurement units such as litres or kilograms. Records of pesticides program planned for each block and areas treated are also available.

It was however observed that the monitoring on the effectiveness of IPM system implemented is inadequate (Minor CAR 07). There is no evidence of pesticides usage being monitored on per hectare basis.

Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

Findings All agrochemicals used are on the official registered as required by the Malaysian pesticides act 149 (1974). The IOI plantation group has reduced the number of chemical in its estates. Glyphosate is the main systemic herbicide used for general field spraying. Paraquat is only used in immature fields and IOI has demonstrated the reduction of spraying rounds in these areas. Records indicate that spraying rounds are being reduced in mature areas indicating positive action by the estates evaluated. Warfarin as rat bait is not extensively used as rat damage is minimal in all estates evaluated. The use of buffaloes to graze the planting blocks in the PAMOL estates is seen as step to reduce the use of herbicides.

For example, records of reduction of paraquat used (in litres) in all Pamol estates since 2004 is as follows:

Estate 2004 2005 2006 2007Ulu 4200 2400 1000 500Bayok 4243 1399 1212 1141Rungus 5225 2035 1315 985Tindakon 4165 1735 1161 520Nangoh 4002 2962 1273 978Meliau 5872 3200 936 226TOTAL 27707 13731 6897 4350

Prophylactic use of Cypermethrin is specified for 24 months after replanting to control rhinoceros beetle. The use of the chemical is not for the entire life cycle of oil palm planting. The treatment is necessary in the first year of re-planting based on the fact that the beetle bred in the decomposing mulch (which is not burnt). Without proper treatment, the pest will quickly spread to a new re-planting field. Such a practice (cypermethrin application) in that specific situation is within the national best practice guideline.

Chemical mixing and application is thoroughly supervised. Sprayers are not allowed to mix chemicals. The mixing is done by estate supervisory management staff and transported to the field for application. The sprayers are briefed on safety and spraying techniques before beginning any task and are appropriately protected and are knowledgeable in emergency response. Knapsack sprayers are used with appropriate nozzle size to ensure effective ground level spraying.






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Chemical storage is observed to be satisfactorily stored according to the Malaysian Occupational Safety and Health and pesticide regulatory requirements. StOPs exist for chemical storage and handling. Chemical are placed in secure separate stores away from habitation and water courses. Spillage containment exists. Material safety data sheets are available for all chemicals stored and the relevant personnel well versed in the information in these sheets. Storage of knapsack sprayers is also done with the necessary care. Used Chemical containers were disposed of by burying in isolated perched sites away from water courses, but at the time of assessment, the company has changed the policy to store empty chemical container and disposed it off through Department of Environment (DOE) approved agent.

Pesticide application is undertaken with minimal risk and impacts. Chemical concentrations are not maximised and only tested optimal concentrations are used for all herbicides. All necessary precautions are in place and spillage is minimal. IOI does not practice aerial spraying.

The company undertakes residue testing as part of its commitment to food safety and traceability compliance upon client’s request. To date, no buyer has requested for such testing at the CPO mill. The test are normally carried out at the Group’s refinery in Sandakan or in Europe.

StOPs are available together with CHRA but there is no written justification for use of specific chemical in specific activities (Minor CAR 08). Chemicals are prescribed without adequate written justification and explanation why alternatives are not acceptable.

Warning notices on chemical use were observed to be posted in Bahasa Malaysia at storage areas. Staff handing chemicals and applying chemicals in the field have been kept informed of safety considerations. Field workers interviewed understood chemicals represented a danger and the need to avoid ingestion, but had little understanding of the specific risks to themselves from each chemical they had handled.

There is documentation of annual medical surveillance conducted in the mills and individual estates. Examination by Hospital Assistant identifies pregnancy. Pregnant women reassigned to alternative tasks. Pregnant and breast-feeding women are allocated less arduous and risky work, e.g. assigned as general cleaners with daily wage. A provision for female workers to be excused from pesticide work for confirmed pregnant and breast-feeding women is available in the estate and mill management plans.

Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented.

Findings IOI has documented an occupational health and safety plan, which include health and safety policy, working procedure for all tasks, training, monitoring system and etc. The implementation of health and safety policy and procedures are considered adequate.

Workers have been adequately trained in safe working practices and PPE supplied for all workers, both in the estates and mills. There is a daily briefing by the mandors (supervisors) during the Muster Call for workers prior to commencing work, whereby workers are reminded of OSH requirements and their PPE checked.

In general, it was observed that:

• A safety and health policy is available (Occupational Safety, Health and Staff Welfare Policy), as stipulated in the individual management plans for estates and mill. The health and safety policy is communicated to new workers and staff during induction training and via mandores at the muster call every morning which is documented at the estate level.






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• There is a Safety and Health Chairman (usually the estate manager) and a Safety and Health Secretary cum safety Coordinator (assistant manager or staff at the executive level) at each estate and mill.

• Health and safety committee exists whereby meetings are held on a quarterly basis.

• Emergency response plan is available for each estate and mill.

Accident reporting and investigation procedure in place, as stipulated in the individual management plans for estates and mill.

Though there are records of OSH meetings attended by estate management and representatives of the working groups, there are no records of OSH meetings between the worker representatives and their respective working groups (Minor CAR-09). This lack of regular meeting between the representative and the workers is considered as an inadequate implementation and adherence to OSH procedures.

It is understood that workers are kept informed of OSH related instructions from management by their respective ‘mandores’, but there is no evidence that OSH issues from the workers and brought up management attention other than through direct communications channels.

There is no documentation of company policy on the provision of PPE which is available to employees. The provision for PPE is not communicated effectively to the workers, which have resulted in confusion and discontent, in some instances e.g. the minutes of meeting of the health and safety committee of the mill (Kilang PAMOL) dated 10 April 2008 (item no. 7.5) shows that there was an issue among the workers regarding the deduction of wages for PPE (safety shoes). Evidence of the resolution of this issue is not available (see 6.5.2)Copies of accident reports are available. Accident Statistics and Analysis is conducted on a monthly basis for estates and mill.

Local workers and staff are covered under SOCSO whereby a small percentage is deducted from their monthly wages. In addition, staff are covered under three (3) types of insurance, which includes:

• Group Term Life Insurance• Hospital and Surgical Insurance• Personal Accident Insurance

Foreign workers are covered under the Foreign Worker Compensation insurance as per the Workmen Compensation Act 1952, which includes repatriation expenses and personal accident coverage (accidental death, permanent total disablement, temporary disablement and medical expenses).

Criterion 4.8 All staff, workers, smallholders and contractors are appropriately trained

Findings Staff training records were observed to be well maintained at all sites visited. Meliau Estate has training plan for the year 2008. From the records and documentation, the company has well documented and systematicly implement its health and safety programme. There is evidence that OSH Operating Procedure Training is conducted available for sprayers, manuring, rat baiting, bagworm injection, harvesters, drivers, tractor passengers, ramp operators, chemical store.

Timetable for training and monitoring of Health and Safety is available for the following:

o OSH Training(quarterly)

o DOSH Seminar by mill (quarterly)






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o First Aid Training

However it was observed that the company has not adequately carry out assessment of training needs both for the estate and the mill (Minor 010). Similarly, there was no evidence of individual training records for employees that could be used for the purpose of assessment on the training needs.

PRINCIPLE 5:PRINCIPLE 5: Environmental responsibility and conservation of natural resourcesEnvironmental responsibility and conservation of natural resources and biodiversityand biodiversity

Criterion 5.1 Aspects of plantation and mill management that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings The Environmental Protection (Prescribed Activities) (Environmental Impact Assessment) Order, 2005, listed ‘development of agricultural estate or plantation involving change in type of crops covering an area of 100ha or more but less than 500 hectares’ as a prescribed activity which requires preparation and submission of a Proposal for Mitigation Measures (PMM) report to Environmental Protection Department (EPD), Sabah, for review and approval. Relevant to this requirement, all estates in Pamol group of plantations were established prior to the enforcement of EIA regulation in Sabah. As such, there was no official EIA done for the group apart from Nangoh and Meliau Estate in 1988 which was submitted to the Department of Environment (DOE).

Now, according to EPD, under the new Act (2005), replanting is defined as a ‘development’ project which means that all oil palm plantations has to either submit an EIA report or PMM to EPD.

In compliance to the requirement, the company however, has dedicatedly prepared and submitted quarterly environmental monitoring report to the DOE both for Nangoh and Meliau Estate and that provide results of water quality monitoring etc associated with oil palm plantation operations.

Since acquiring the management of Pamol estates from the previous owner in 2003, IOI has not developed any new areas or carried out expansion of the existing estates. The company only carried out some replanting to replace old palms in the following locations since 2004:

Estate 2004 2005 2006 2007 2008

Ulu 285 132

Bayok 124 82 - 257 63

Rungus - - 199 73 -

Tindakon - - - - 72

Meliau - - - - -

Nangoh - - - - -

As part of effort to address the comments highlighted by the report reviewer, a discussion was held with Sabah’s Environmental Protection Department (EPD) Enforcement Officer on 20 October 2008 (after receipt of review comments) that pointed out that under the Environmental Protection (Prescribed Activities) (Environmental Impact Assessment) Order, 2005, replanting in existing plantation require submission of PMM or EIA to EPD.

IOI has made a commitment to immediately pursue compliance on this matter and will submit the necessary documentation to comply with the necessary instruction / guidance made by the the Department of Environment (DOE).






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As part of meeting the RSO standard, an Internal Group Environmental Management & Monitoring Plans has been produced and put to use by the estates. This document focuses on field practices. Together, these documents have identified management needed for regulatory compliance as well as best industry practices. Observations indicate the company has adopted environmental resource conservation and conservation of biological diversity as a part of estate operating activities.

An Environmental Risk Assessment (which is schedules at half-yearly/quarterly intervals)and Environmental Action Plan was also been developed for the PAMOL Group. The company also has established an accident risk evaluation to identify systematically the risks on safety and health which may affect, or arise from the activities. The accident risk evaluation report is still at the testing stage. An EIA documents identifying point sources of emission to water and air as required for regulatory compliance and actions required by the EIA are being undertaken.

The guidelines mentioned above do not include a mechanism to systematically identify potential aspects and impacts of risk to the environment from estate and mill activities that have not already been identified. This would limit continuous improvement to those areas previously identified and not encourage a more adaptive management approach.

The environmental risk assessment has not yet been repeated and updated, something which will be addressed in due course. Currently there was no mechanism to review and update aspect and impact of risk assessment (Minor CAR 011).

General observations however suggest that environmental conditions at the mill, workshops, fields, housing and amenities areas are well maintained at above industry norms.

MYNI requires that environmental improvement plan to mitigate the negative impacts and promote the positive ones, is developed, implemented and monitored. To this respect, at the time of assessment, no specific improvement plan to promote positive impacts have been documented at the Pamol estate level (Minor CAR 012). It would be expected for such plan would, where applicable, identify targets for management performance at each estate, and set quantifiable indicators to monitor management performance for key the areas where management action has been identified.

Criterion 5.2 The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations

Findings Areas within the estates with High Conservation Value (HCV) have been identified for biodiversity and environmental protection (pls see map attached). Management to conserve the HCV value has been initiated. These areas have been identified on Geographical Information System (GIS maps), and marked in the field. Ecological types have been identified and a provisional list of species present drawn up. Currently, Universiti Malaysia Sabah (UMS) has been engaged to undertake a biological survey. These HCVs have identified habitats for ERT species such as the Proboscis Monkey.

Assessment of the sites have identified the areas as unsuitable for palm cultivation and having values that would benefit from conservation. The assessments have not yet progressed to identifying and evaluating threats to conservation values and sources of those threats. (See management plans in 5.2.2 below).

Management Plans for HCV areas are contained within estate management documents and include proscriptive activities for social engagement with local communities, information on wildlife, security patrols and maintenance of facilities. Field management is evidently supported through budget allocated for soil and water conservation.






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HCV areas have been sign posted and meetings held with local communities to explain that the areas have been intentionally set aside. Local community interviews confirm the actions of the company are understood. Interviews suggest local communities have no significant dependence on these areas for food, materials or cultural practices. There has been significant effort made to develop the amenity value of HCV to promote their conservation objective.

A provisional list of ERTs has been compiled from historical observations. There are records of routine monitoring of species numbers. The ERTs identified include the Proboscis Monkey. A UMS survey team has been engaged and is currently undertaking a systematic assessment of the HCV sites. Recommendations from UMS could be considered as input from ‘expert stakeholders’. Improvements being investigated for HCVs includes: linking forest patches through riparian future reserves.

The management of the habitat for ERT however does not have sufficient monitoring indicators for their conservation (Minor CAR 013). Proboscis Monkey are present at Bayok Estate and their habitat protected from threat from human activity. But no management is directed towards improvements in habitat quality – food plants and shelter, that has been degraded by historical disturbance and fragmentation.

Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner.

Findings Waste generated by the operation in the mill and estates have adequately identified. The EIA document identifies regulated waste, and observations confirm that domestic, agricultural and process wastes have been identified and consistently managed according to operating procedures. Waste is generally managed in a responsible manner suitable for the type and volume of waste produced.

Scheduled wastes were observed to be consistently collected, stored and disposed in accordance to StOPs. Other wastes were observed to be separated and the wastes that were not recycled – metals, dense plastics, etc. were sent to landfill. These were dedicated sites in the estates located on mineral soils above the water table. Where possible, waste products are recycled or used as beneficial bi-products in the field. Crop residues / biomass are recycled. Field wastes – fronds, bunch stumps are kept






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in the fields. At the mill, fibre is used as a boiler fuel at the CPO mill and surplus fibre & shell transported out for use as biomass fuel at the refinery located near Sandakan town. POME, EFB and ash used as ‘manures’ in the field in accordance with best industry practices.

Not all source of pollution have been identified (See 5.3.1 above) and consequently those not identified have not been subject to management attention. Waste produces leachates which are not treated before they leave the factory and enter local water system (Minor CAR 014).

Of the wastes and pollutants identified, minor omissions include: discarded tires in the field which are potential mosquito breeding sites and derelict vehicles including a school bus which could be a hazard to children had not been sent for final disposal.

Not all potential sources of pollution have been identified. Pollution sources from old disposal sites and non-point release have not been identified and their risks assessed as required under 5.1.1. Had a periodic risk assessment been undertaken, the following items may have been noted and addressed:

• Surface run-off and wash water from the mill are drained directly to local streams without trapping oils, fats and sediments, and treatment of water.

• Mill bi-products and wastes that include: EFB, fibre, shell, boiler ash and clinker, flue ash, etc. are stored in open ground without any containment to collect leachates before they enter local surface and ground water.

• Old open dump/store of organic wastes and ash have leachates entering local surface and ground water.

• Buffalo holding yards and ponds drain into local streams near housing areas with no monitoring for E.coli and other potential impacts to water

• Production of N2O from loss of nitrogen fertilisers in the field. (See 5.6 below.)

Criterion 5.4 Efficiency of energy use and use of renewable energy is maximised.

Findings As described earlier, the fibre and kernel shell were burnt in the boiler to generate energy either at the CPO mill or at the refinery. Assessment of energy use and monitoring of its usage is only undertaken as part of budgetary control. As part of continuous improvement process, IOI is planning to develop a biomass power generation plant using shells and EFB in its refinery in Sandakan.

Fossil fuel (diesel and petrol) use in the vehicles, generator sets and other machinery are monitored. Use of buffalo for crop evacuation has significantly reduce the use of fossil fuel in the operation.

Indicator 5.4.1 of the MYNI require that renewable energy use in the mill is monitored compared to the CPO production. It was observed that the rate of use of fibre in the Pamol mill is not monitored against energy production or the CPO production. There was no record of fiber input into the boiler (Minor CAR 015). With no baseline value for renewable energy use and periodic monitoring, it is not possible to observe trends.

It was noted that the boilers go through sub-stoichiometric cycles when unburnt carbon is released to the atmosphere. Flue ash was observed to contain unburnt carbon.

At the time of close CAR visit, the company has provide evidence of monitoring records of fibre usage in boilers in the mill for the month of June 2008 and there is a commitment to undertake this on a monthly basis. MINOR CAR 015 is closed.






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Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

Findings In line with legal procedure and best management practices, IOI does not use fire in the plantation management. IOI has a zero burning policy and physical clearing means are used.

As described in the earlier sections, materials generated during land clearing for replanting were chipped and left to rot on site. In areas visited, it was observed that palm trunks felled are cut into small slices and windrowed. The practice was consistent in all estates observed.

Domestic waste generated at the mill as well as housing within the estate were collected and disposed off site of at the landfills. No sign of open burning were observed.

Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

Findings Environmental Risk Assessment and EIA documents prepared have covered parts of the assessment of polluting activities. Boiler stack emission is monitored and oxidation pond effluent is monitored at least twice a year. Water quality of adjacent rivers is also monitored.

The relevant activity relevant to enhancing carbon sequestration and storage undertaken by IOI is includes re-vegetation of riparian areas.

Prescriptive approaches to control GHG including NOx are mentioned in the Internal Group Environmental Management & Monitoring Plan. Observation of activities that contribute to the mitigation of polluting activities from waste management at the mill and estates include: attenuating concentrated mill wastes- EFB, fibre, shell, ash & POME, by distribution to the field; recycling of waste materials – metals, plastics, etc.

Not all polluting activities outside regulatory requirements however have been taken into consideration (Minor CAR 016). This is true for activities related to the production of GHG where not all potential pollution generating activities have been identified through risk assessment reviews, and considered for management response. See 5.3.1 above for examples of the sources of potential pollutants and 4.2.1 for note on GHG.

There was no peat soil within Pamol estates.

PRINCIPLE 6:PRINCIPLE 6: Responsible consideration of employees and of individuals andResponsible consideration of employees and of individuals and communities affected by growers and millscommunities affected by growers and mills

Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings The company has developed a framework for carrying out social impact assessment as per the guidance document and is planning to carry out the assessments for each estate. The report which is essential for short and medium term in handling potential impacts and to mitigate impacts which have arisen has not been produced.

The company has documented evidence of passive impact assessment, i.e. a reasonable amount of consideration to mitigate social impacts for employees and communities affected by the plantations and mills as well as resolution of impacts, only if grievances are brought to the attention of the managers e.g.: roads, repairs for housing woes, assistance in times of duress, etc.

There is evidence of active social engagements with stakeholders, especially the






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employees and local communities. The estate managers and their Social Liaison Officers have made the effort to engage with their employees through the Employees Consultative Council (ECC) and the local communities through intermittent visits to the villages. There is a timetable with responsibilities for mitigation and monitoring of social aspects as stipulated in the estate and mill management plans.

However, only social impacts raised through consultation with the employees are documented, i.e. minutes of meetings but there is no documented evidence for participatory social impact assessment with the local communities.

In summary, at the time of main assessment, there was no evidence of a documented social impact assessment carried out through consultation with affected communities (Major CAR 017).

At the time of close-out visit, and subsequently thereafter, the company has provide baseline documentation of a social impact assessment (SIA) (non-restrictive format) for each estate carried out through consultation with communities. The report contain basic social element description and identifies potential impacts and measures to mitigate such impact (Major CAR-017 is closed).

Eventhough its was observed that there were no major social issues within Pamol estate management, but to fully comply with the MYNI requirement, the exercise carried out and the report require improvement in the following areas :

• It need to cover more social areas not just limited to gauging the impacts related to employment and living conditions.

• The description of methodology adopted is only limited to sampling techniques. A detailed description of social research methodology adopted which gives a clear indication of the reliability of data collected, data analysis and validation techniques is not provided in the SIA.

• The document should also has updated time-bound social plans linking the impacts with mitigation measures.

• Adequate maps which clearly show the communities and key elements such as extent of community land, land status etc. relative to the estate.

• Community socio-economic profile

• Overall conclusions linking the SIA to the management plans.

Criterion 6.2There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties.

Findings There is evidence of active consultation with local communities with the village heads on a sporadic basis whereby the managers attempt to impart information on company decisions/policy, e.g. non-acceptance of local communities FFB at the company mills.

There is little evidence to support effective communication and consultation mechanisms designed in collaboration with local communities. There is evidence of intermittent meetings with the local communities in Tindakon estate but the frequency of these meetings is unknown.

Communications do not take into account differential access to information to different levels of local community, e.g. women and ordinary members of the community. The communications with the local community is at the village administration level or village elites. The impact arising from communication with village representatives alone results in information not being adequately disseminated to the larger community. For example, there are requests by the local communities for consideration/assistance by the company for the following:

• Acceptance of local communities (smallholders) FFB at the mills






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• For the gate at the Cocos Village to be opened 24 hours to enable them to use the route for emergencies.

Though the company has conveyed company decisions pertaining to the two examples above adequately to the village representatives, the villagers are still unclear of company decisions.

The company has appointed / nominated a Social Liaison Officer in early 2008 that is responsible for all estates and the mill with clear roles and responsibilities tabulated in the estate management plan.

There is also a Gender Representative (usually female) appointed for each estate and mill, whose duties include attending to grievances pertaining to gender issues, especially in sexual harassment. The Gender Representative is also in-charge of communicating the Policy on the Prevention and Eradication of Sexual Harassment in the Workplace to the workers and staff.

There is a list of stakeholders available which is comprehensive, involving all stakeholders, e.g. government agencies, non-governmental organizations, village representatives, sundry shop owners, HUMANA, etc. The stakeholder list also includes the names of each employee. There is documented evidence of communication with stakeholders and records of actions taken to resolve grievances of employees (see weakness). One weakness however was observed where there is inadequate documentation of action taken in response to input from stakeholders who are non-employees, e.g. the local communities. The status of queries from the local community pertaining to the request of land claims for the clinic and infrastructure development (20 acre) at Nangoh Estate is not known.

Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

Findings There is evidence of a mutually agreed system for dealing with complaints and grievances for employees, which is implemented and accepted by all parties. The mechanism is as follows:

1. Estate Consultative Committee (ECC) which has representation from different level of workers who are elected by the workers.

2. There is grievance report book at all estates and the mill

3. For field workers: Report to mandoresupervisorAssistant managerManager

4. For staff: Report to manager

5. Report to Social Liaison Officer/Gender Representative

For other stakeholders, e.g. the local communities, the following steps are observed:

1. Community representatives write-in to the company (applicable to other stakeholders as well);

2. Community representatives meet the manager at the estate (applicable to other stakeholders as well);

3. The Social Liaison Officer visits the community representatives (frequency uncertain);

4. The company holds meetings with community representatives (minutes of meetings dated 11 January 2008 at Tindakon estate)

5. Local community invites company representatives to their village committee meetings whenever necessary. There is evidence that company representatives, e.g. estate managers have actively participated in these meetings.

There is adequate evidence to demonstrate that the system is open to any affected parties. Internal complaints are dealt with mechanisms such as the Employees Consultative Committee (ECC) with gender representation (at least a designated






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gender representative) and a designated grievance book which is endorsed by the complainants when action has been taken to resolve a grievance.

There is evidence of documentation of grievances which have been resolved and the outcome accepted by the workers (signature of workers obtainedd for every grievance resolved). There is evidence that generally disputes are resolved in an effective, timely and appropriate manner.

Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Findings Pamol estates have been established by Unilever in 1960s and IOI Corporation Bhd has acquired the estate about 10 years ago. Based on documented history, the estate was established by felling forested land granted by Sabah government. The programme was part of the effort to upgrade rural socio-economic scenario by involving local communities.

It was observed during the evaluation that there was no issues pertaining to compensation of legal customary rights to local communities as far as Pamol estates management and operation is concerned. The local communities were employed by the management to work in the plantation. Most of the communities within the area were brought by the plantation management and has been living there since the establishment of the estates in 1960s.

The company has provides amenities such as school, clinic, infrastructures etc for the communities. The community has the standard Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK) establishment, that meet once a month to discuss and act on any issues brought by the member of the community. The chairman of the JKKK report to the higher authority of the government. The estate management maintain close rapport with the leaders and consider issues brought by the JKKK leaders are official complaints where action will be taken

There are evidences that the company has effectively acted on complaints made by the community for example on the assistance given in resolving water woes of their employees by providing one tank for two units.

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Findings There is evidence of documentation of rates of pay, contracts of employment, terms and conditions of employment made available in languages understood by workers or explained carefully by management personnel of the individual operating unit. The appointment letter of staff contain the clear details of job description, work location, salary and other terms such as annual leaves, medical benefits etc. Similarly, offer letter extended to the foreign workers contain the similar details with additions of terms and conditions wage calculation, overtime, housing, deduction for levy, payment to FOMEMA, legal age, prohibition of marriage, conflict resolutions as well as termination of work permit and prohibition against strike.

There was however an unresolved issue pertaining to deduction of pay for various purposes (Minor CAR018). The deductions are still carried out despite an earlier (unresolved) query by representatives of the Labour Department on their visit on 21/06/2006 to the Human Resources division at the Sandakan Regional Office.

During the close out visit, the audit team observed adequate evidence of documentation pertaining to dissemination of information related to maternity leave, allowance, sick pay and reimbursement of delivery costs etc. The document dated 4th

July 2008 is adequate in addressing the non compliances sighted during the main






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assessment. MINOR CAR 018 is closed.

Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel..

Findings Workers were hired through a proper contract where appointment letter is issued. There is no published statement in local languages, either in employment contracts or appointment letters or other types of documentation recognizing freedom of association. This observation is true for Malaysian employees only. In the context of foreign labour, the company is limited by Malaysian Immigration Laws which states that foreign workers are prohibited from engaging in any kind of trade union.

Any issues between employer and employees are brought up to the Employees Consultative Committee (ECC). As described in the earlier sections of this report, minutes of meetings of the ECC are available at the estates and mills.

According to the Sabah Labour Ordinance provided below, it is implicit that freedom of association is not restricted by the company. Discussion with the workers does not show that this is a big issue as far as Pamol estates is concern.

Criterion 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are nor exposed to hazardous working conditions.

Findings There is evidence of clear definition of working age and working hours in the workers’ terms of reference/agreement. There is documented evidence that the minimum age requirement is met.

There is no evidence on any employment of minors in any of the estates and mill visited. Verification of the list of employees records show that all workers were above 17 years of age.

Criterion 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

Findings There is a publicly available equal opportunities policy which states that the company is an equal opportunity employer, whereby the company does not practice discrimination based on race, caste, national, origin, disability, gender, sexual orientation, union membership, political affiliation, or age, except for positive discrimination.

The company does pay maternity allowances to both local and foreign workers as stipulated in the Sabah Labour Ordinance. The company maintains a Register of Maternity Leave and Allowances (which complies with Section 94A, of the Sabah Labour Ordinance) for foreign and local workers and staff.

Note: Malaysian Immigration Laws (as per letter dated: 10 December 2007): ref: IM.101/S.A/306/4.KL.6) prohibits foreign workers who are pregnant are not allowed to be employed.

However it was found that the company has not made payment of maternity allowance to workers. There were also evidences of slight disparity in terms of pay to different group of workers which was not adequately justified by the management (as per company memo dated 28 January 2008, Sub: Rates of Pay) (Minor CAR 019).

At the time of close CAR visit, the followings were observed:

• The company has adequate documentation on maternity allowances paid to foreign workers and has provided reasonable explanation as to the mechanism of






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payment for maternity allowances according to the Sabah Labour Ordinance.

• The management has revised the daily wage rates from RM10 to RM12 for women workers, which is now the same as that for the male workers (refer to company internal memo dated 30th June 2008: Revision of Total Daily Wage for Foreign Workers).

With such evidence of actions taken by the company, MINOR CAR 019 is closed.

Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Findings There is a policy on “the prevention and eradication of sexual harassment in the workplace” (memo dated 6 December 2006). There is also a Gender Representative (usually female) appointed for each estate and mill, whose duties include attending to grievances pertaining to gender issues, especially sexual harassment. The Gender Representative is also in-charge of communicating the Policy on the Prevention and Eradication of Sexual Harassment in the Workplace to the workers and staff.

Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.

Findings Pamol mill does not deal with smallholders. All FFB processed by the mill are sourced from IOI estates evaluated under this exercise.

There was no evidence to suggest that the company has conduct in unfair business with their contractors and sub contractors (re planting activities etc).

Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate.

Findings There is evidence that preference for employment is given to members of local communities for all positions, especially in the mill and offices. Anecdotal evidence indicates that members of the local communities shy away from field work/manual labour.

The company’s Corporate Social Responsibility (CSR) evidently contribute to various programmes such as:

• Humana Child Aid Society Sabah,

• Education foundation (Tan Sri Dato’ Lee Shin Cheng Foundation) & scholarships (e.g. the annual Yayasan’s Young Achievers’ Awards Programme),

• Student adoption programme (Tan Sri Dato’ Lee Shin Cheng Foundation; memo dated 8 May 2007);

The company also provide assistance in kind to communities and employees for the utilisation of company infrastructure such as schools, mobile healthcare facilities and other amenities provided by the company. The company also provide technical advice to the communities on Good Agricultural Policy (GAP) to smallholders near Ladang Ulu.

The community are granting access through the estate roads which is maintained by the company. As a low lying area, the company has facilities to deal with natural disaster such as flood, which is normally extended to the authorities and local communities.






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PRINCIPLE 7:PRINCIPLE 7: Responsible development of new plantingsResponsible development of new plantings

Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

Findings This whole Principle is not applicable to this assessment as all Pamol estates in Sandakan Region have been planted with oil palm since 1960s prior to acquisition by IOI. There are no new plantings. The company is only involved in re-planting programme after felling of old palms and there is no plan for expansion.

Criterion 7.2Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations.

Findings Pls see 7.1.

Criterion 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

Findings Pls see 7.1

Criterion 7.4 Extensive planting (to be determined by SEIA) on steep terrain, and/or on marginal and fragile soils, is avoided.

Findings Pls see 7.1

Criterion 7.5 No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.


Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreement.


Criterion 7.7 Use of fire in the preparation of new plantings is avoided other than in specific cases as identified in the ASEAN Guidance or other regional best practice.


PRINCIPLE 8:PRINCIPLE 8: Commitment to continuous improvement in key areas of activityCommitment to continuous improvement in key areas of activity

Criterion 8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

Findings IOI as a plantation group has demonstrated commitment to continuous improvement. The active research division promotes improvement in crop production. There are policies to support improvement efforts. As an established plantation company, IOI continue to monitor its performance. Over the years the company has recorded good results in terms of production.

The Internal Group Environmental Management & Monitoring Plans addresses environmental risk, providing guidance for the environmental risks associated with specific areas of estate and mill activities. IPM system in place that employs biological control methods and undertake routine pest census. When monitoring results indicate thresholds have been exceeded, a chemical response is initiated.

Almost all agricultural wastes from the mill, workshops and fields are recovered for






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beneficial use. Biomass is used to substitute fossil fuel; grasses used to feed buffalo; domestic waste separation is practiced. Items connected with regulatory compliance have been addressed and are consistently monitored.

The company has documented evidence of impact assessment, i.e. a reasonable amount of consideration to mitigate social impacts for employees and communities affected by the plantations and mills as well as resolution of impacts, only if grievances are brought to the attention of the managers e.g.: roads, repairs for housing woes, assistance in times of duress, etc.

There are also evidences of active social engagements with stakeholders, especially the employees and local communities. The estate managers and their Social Liaison Officers have made the effort to engage with their employees through the Employees Consultative Council (ECC) and the local communities through visits to the villages.

A weakness however is observed where currently, there is no internal mechanism is developed to capture performance and expenditure in social and environmental aspects (Minor CAR 20), which is required under indicator 8.1.6.






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10. CHAIN OF CUSTODY/TRACEABILITY OF CRUDE PALM OIL (CPO)An important aspect of sourcing CPO from a managed plantation is the evaluation of chain of custody system for the transportation of the material produced by each plantation. As for Pamol Sabah plantation, the palm oil mill only processes FFB sourced from their own plantation, as such possible contamination with FFB from other areas is non existent . However, IOI has a refinery in Sandakan that processes 40 % of the CPO produced by the company’s mills to oleochemicals and other downstream products. The majority (60%) of the CPO produced by the own mills is exported to buyers.

The traceability of FFB produced from the plantation block, delivery to the mill and despatch of CPO from the mill to the refinery are as follows:

1. FFB from the harvesting block to the mill

Each estate is divided into blocks or compartment where activities are carried out according to this arrangement. Harvesting of FFB is planned and implemented block by block. Harvesting crews will carry out the task given.

The FFB is transported to the mill using lorry that collect the FFB from the predetermined routes or locations . Each lorry dispatched from the field to the mill caries a ‘dispatch ticket’ that contains details of the estate, division, field number#, total number of bunches, harvesting date, vehicle registration number, time of dispatch etc. On arrival at the mill gate, each lorry is given a gate pass and proceeds to the weighbridge. After weighing and grading, each lorry is then issued with a grading chit that contains details of the results of the quality check, gross weight, time and other details similar to those information in the dispatch ticket. All information is keyed into a computer system.

After unloading the FFB, the lorry will return to weighbridge for measurement of their tare weight. The information is automatically generated through a computer system.

The mill maintains clear records of daily delivery of FFB to the mill through a ‘Quality FFB Report’. The records are summarised into a monthly basis in ‘FFB Quality Summary Report’.

As described in many sections of this report, Pamol Sabah mill only receives FFB from its own plantations. No evidence of sourcing / delivery from other plantations or small holders.

2. Processing of FFB to output of CPO at the millAfter arrival at the mill, the FFB is processed immediately. The mill maintains detailed records of the FFB received and the CPO and palm kernel (PK) produced on daily basis. The CPO produced will be channelled into 4 separate storage tanks.

3. CPO transportation from the mill to the refinery

CPO from mill is transported via barges to the refinery in Sandakan that ply through a 28 hour journey through Sg Sugut. Each barge carries the following:

• CPO shipment report/memo from laboratory to mill manager that indicates the vessel/barge name, date of loading to completion, volume loaded etc.

• Chain of Custody report that includes details on the source of FFB during the period, tank number of origin, shipment details and quantity

• Dry certificate that includes ‘sounding report, volume being dispatched, time sheet etc.

Records of FFB received, CPO output and the CPO and PK dispatched from Pamol mill on monthly basis are as follows (July 2007 – June 2008):

--------------------------------------------------------------------------------------------------------------------------------------------------------SGS (Malaysia) Sdn. Bhd Unit 10-1 10th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202

www.sgs.com





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Table 12: Records of FFB received, CPO output and the CPO and PK dispatched from Pamol mill

MONTHFFB

RECEIVED

CPO OPENING STOCK

CPO OUTPUT

CPO DISPATCHED

CPO ENDING STOCK

PK OPENING STOCK

PK OUTPUT PK

DISPATCHEDPK ENDING

STOCK

July 07 23738.20 1081.874 5113.487 2802.878 3392.483 133.946 972.204 983.720 122.430

August 07 33851.59 3392.483 7453.403 7146.738 3699.148 122.430 1651.806 1554.670 219.566

September 07 34480.64 3699.418 7550.994 8397.522 2852.620 219.566 1922.209 1938.810 202.965

October 07 29075.88 2852.620 6483.645 5459.067 3877.198 202.965 1616.695 1635.300 184.36

November 07 34672.05 3877.198 7632.822 9517.912 1992.108 184.360 1931.432 1986.580 129.121

December 07 28739.25 1992.108 6271.922 6609.107 1654.923 129.212 1483.362 1324.540 288.034

January 08 26136.75 1654.923 5779.933 4903.644 2531.212 288.034 1397.884 1570.220 115.698

February 08 15774.31 2531.212 3356.006 3456.767 2430.451 115.698 814.234 725.300 204.632

March 08 20584.05 2430.451 4451.927 4180.546 2701.832 204.632 1031.012 1122.280 113.364

April08 23609.79 2701.832 5298.674 4101.630 3898.876 113.364 1190.788 1194.050 110.102

May 08 26289.64 3898.876 5867.312 6633.595 3132.593 110.102 1312.329 1261.690 160.741

June 08 27965.94 3132.593 5950.834 5257.853 3825.574 160.741 1265.456 1263.960 162.237

TOTAL 324,918.09 71,210.959 68,467.259 16,589.411 16,561.120

The CPO produced by the mills are transported to the refinery by barge. The refinery also sources CPO from other plantation including small holders.

The source of each tank of CPO transported to the refinery is adequately identified to its origin, volume etc using Delivery Order notes document. The document is serialised and each tank is adequately sealed to prevent tampering. Similarly, each barge load of the CPO barged to the refinery is also identified to its origin through issuance of DO notes. However, at present the CPO from the tanks and the barge are pumped into 70 large storage tanks in the Refinery. Each storage tanks is adequately numbered and metered to measure the volume. At this stage, the CPO from different sources are mixed together in the various tanks.

There are possibilities that the CPO from different sources can be segregated. For example currently, CPO from PAMOL mill is segregated not mixed with CPO from other areas due to the fact that the material has a superior quality and is being purchased by Unilever. The CPO from PAMOL is barged to the refinery where each barge carries DO notes. Upon arrival at the refinery, the CPO will be pumped into designated storage tanks.

The mill also issues a document -‘information on identity preserved CPO’ that adequately identifies the source of the CPO barge (including information on the source of the FFB) and the volume delivered. Upon sale of the CPO, the refinery issues ‘identity preserve CPO’ document to buyer confirming the source and origin of the CPO together with volume and quality.

At present, the majority of the CPO from different sources are mixed in storage tanks at the refinery, however some are also segregated. The management has the necessary


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procedures in place to clearly segregate the CPO received from different mills providing the basis for material segregation with clear documentation stating the origin.

11. ASSESSMENT DECISION

The main assessment carried out has resulted in the issuance of 1 Major and 19 minor Corrective Action Requests (CARs) which prohibit recommendation for certification of the Pamol Estates. The company has taken the necessary corrective actions and has requested SGS to carry our a close-CAR visit within a 60 day requirement.

The close-out CAR assessment visit has resulted in the closure of one Major and six Minor CARs and thirteen minor CARs remain outstanding.

With no outstanding Major CAR, the IOI Corporation Berhad’s management of Pamol Plantation, (Sandakan), Sabah is now recommended for the certification against the RSPO P&C MYNI requirements. The issues highlighted as Minor CARs must be adequately addressed and the adequacy of the actions taken need to be verified during the first surveillance visit to be conducted within 12 months from the date of the completion of the main assessment.

Following procedures, the RSPO Audit Review Panel has reviewed the report and deliberated on the recommendation made by the certification body. Due to the complication with compliance with the state’s legal environment, the RSPO Board has approved the certification of the client with the following conditions:

a) The certification unit(s)/its supply base must have started the process of getting PMM/EIA approval from the Sabah EPD and evidence of having started must be submitted to the Secretariat (if not already done so).

b) that certified volumes of CPO and PK should exclude proportionate volumes for areas where EIA/PMM approvals are pending (the proportionate volume is to be computed as average yield of supply base as reported for the certification unit x area for which approval of PMM/EIA is pending).

c) that the certification be revoked if no PMM/EIA approval is received by the time of fist surveillance visit.

As such, the Board has recommended issuance of a Conditional Certificate to the client. The compliance to the conditions set must be evaluated during the first surveillance visit to be conducted by the certification body.

Taking into consideration that there are a total of 1,165 ha of replanted palm since 2005 (the time the enactment of the Sabah EIA law), which forms about 10% of the total planted area, the available volume of sustainable crude palm oil and palm kernel from Pamol Sabah during the conditional certification period will be as follows:

Annual Crude Palm Oil Out (mt) Annual Palm Kernel Output (mt)



70,000 63,000 16,500 14,850


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12. ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY AND FORMAL SIGN-OFF OF ASSESSMENT FINDINGSIt is acknowledged that the assessments cited in this report have been carried out as stipulated and we confirm the acceptance of the assessment report contents including assessment findings.

END OF REPORT


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