IOI Group

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IOI Group
Public limited company
Industry Conglomerate (Plantations, agriculture, chemical manufacturing, consumer marketing, property development, investment, and resort management)
Founded 1969
Headquarters Kuala Lumpur, Singapore
Area served
Southeast Asia
Key people
Tan Sri Dato' Lee Shin Cheng (Chairman)
Products Hotels
Number of employees
32,000
Website www.ioigroup.com

IOI Corporation Berhad, commonly referred to as IOI, was incorporated on 31 October 1969 as Industrial Oxygen Incorporated Sdn Bhd. IOI is one of Malaysia's biggest conglomerates that started off from industrial gas manufacturing. It ventured into property development in 1982, followed by oil palm plantations in 1985. As of June 2009, IOI Group employed more than 30,000 personnel of more than 23 nationalities in 15 countries.

IOI is listed on the main board of the KLSE (now known as Bursa Malaysia). Subsidiaries IOI Properties Berhad and IOI Oleochemical Industries Berhad (Industrial Products) were separately de-listed from the exchange and privatised in April 2009[1] and March 2006,[2] respectively.

The group is headed by Lee Shin Cheng, the executive chairman.[3]

Core businesses[edit]

Palm oil plantations[edit]

Palm oil plantations are IOI's biggest income generator. As of 2015 about 55 per cent of the conglomerate profits comes from its oil palm plantations.[4]:100 The group operates 152,000 hectares of oil palm plantations in Malaysia and 83,000 hectares in Indonesia. It has 12 palm oil mills with total milling capacity of 4.1 million tonnes per year at its 80 estates throughout Malaysia.

With oil yield of some six tonnes per hectare per year at its mature estates, IOI is the most efficient plantation company in the world. Malaysia's oil palm average yield for the last 20 years has been stagnant at four tonnes per hectare per year.[5]

Nestlé stopped buying palm oil from IOI in 2012.[6] The United Nations Environment Programme says palm oil production is the main cause of deforestation, which is occurring at a rate of about two per cent per year. Indonesia is also the world's third largest carbon emitter, largely as a result of deforestation and the burning of peatlands.[7]

Real estate[edit]

IOI develops real estate makes and property investments. IOI owns two resort hotels, the Marriott Putrajaya Hotel and Palm Garden Hotel in Putrajaya. The property segment contributes around 18 per cent of the group's earnings.

Oleochemicals and speciality fats[edit]

IOI is the largest vegetable oil-based oleochemical manufacturer in Asia—held under wholly owned entities IOI Oleochemical Industries Bhd and Pan Century Oleochemical Sdn Bhd with a combined capacity in excess of 750,000 tonnes per annum.[8]

These plants produce fatty acids and esters, glycerine, soap noodles, fatty alcohols, and metallic strearates. These have various industrial applications in the production of food, pharmaceutical, cosmetics, personal care, home care, industrial detergent-surfactants and lubricant products. Products derived from oleochemicals are more readily biodegradable and hence do not pose a threat to the environment. This is because oleochemicals are derived from renewable resources, as compared to petrochemicals which are obtained from petroleum.

IOI's speciality fats businesses are operated by IOI Loders Croklaan,[9][10] with manufacturing facilities in the Netherlands, North America, and in Malaysia (with combined production capacity of more than a million tonnes per year). Loders Croklaan's customer base include global food giants like Unilever, Nestle, Cadbury and Kraft. Specialty fats are used in pastries, confectionery, snack foods, and ready-to-eat meals.

Refineries[edit]

IOI owns refineries in the US and the Netherlands.[11]IOI extended its activities to Indonesia in 2005.[4]:100 Its associate company in Indonesia is Bumitama Gunajaya Agro.[4]:100 On 27 September 2016, Greenpeace blockaded the IOI refinery in the Netherlands in order to force IOI to adopt a more sustainable plantation policy.[12]

Critics[edit]

See also: Oil palm

Environmental and civil organisations have criticized IOI Group. Greenpeace first documented destruction of orangutan habitat and peatland forest in the 2008 report Burning up Borneo[13], followed by a second report in 2015, Under Fire[14]. The company also faced alligations in 2014 from Finnish NGO Finnwatch of serious labour issues on its Malaysian plantations, including confiscating workers' passports, providing contracts in a language workers could not understand, restricting freedom of association and paying salaries below the minimum wage.[15]

IOI is a co-founder of the Roundtable on Sustainable Palm Oil (RSPO) and has played an active role in shaping the scheme. The company has several of its estates in Malaysia certified as complying with RSPO standards. According to Friends of the Earth in March 2010, IOI Corporation failed to live up to its claims of green stewardship. For example:[16]

  • Plantation development took place in forest lands without approval of the Ministry of Forestry in conflict with the Indonesian legislation
  • Plantation development took place without approved environmental impact assessments
  • Fraudulent statements were made
  • Encroachment has taken place in forests and peat lands
  • There is significant increase in fire hot spots
  • Corporate claim not to use peat land but to circumvent the issue it does not consider coastal or shallow peat as peat land.
  • Corporate claim not to use "burning policy". According to the Fire Information for Management System (FIRMS) there was a significant increase in the number of hot spots after land clearing activity started in 2009.
  • IOI's current land development activities may trigger significant land conflicts.

After a complaint filed by AidEnvironment in April 2015, the RSPO certificates of the IOI Group are suspended as of 1 April 2016.[17] Since then, many consumer companies like Unilever, Nestlé and Mars have cancelled contracts with the company.[18] IOI was reinstated in August 2016 by RSPO after it was judged to have fulfilled the group's demands to improve its environmental performance.[19] In September 2016, Greenpeace published a damning indictment of IOI entitled, A Deadly Trade-Off; IOI's Palm Oil Supply and its Human and Environmental Costs.[20]

References[edit]

  1. ^ IOI Corp to buy out property arm. New Straits Times, 5 February 2009
  2. ^ IOI gets SC nod to take unit private. New Straits Times, 25 October 2005
  3. ^ IOI chairman's passion for his oil palms. New Straits Times, 31 October 2009
  4. ^ a b c Varkkey, Helena (2015). The Haze Problem in Southeast Asia'. Abingdon: Routledge. 
  5. ^ Raising oil palm yields. New Straits Times, 25 January 2008
  6. ^ Forbes 2012 #4 Lee Shin Cheng
  7. ^ Rebecca Smithers (6 December 2009). "Big break for Fairtrade as Kit Kat receives certification". The Guardian. Retrieved September 2, 2016. 
  8. ^ IOI to buy Aditya Birla's Pan Century for RM423 million. New Straits Times, 8 December 2006
  9. ^ "Our Company; About Us". IOI Loders Croklaan. Retrieved 27 September 2016. 
  10. ^ IOI to buy Unilever's oils and fats division. New Straits Times, 31 August 2002
  11. ^ Forbes 2012 No. 4 Lee Shin Cheng
  12. ^ http://www.rijnmond.nl/nieuws/146790/Greenpeace-demonstreert-tegen-palmolieproductie-in-R-damse-haven
  13. ^ How Unilever palm oil suppliers are Burning up Borneo / Greenpeace
  14. ^ Indonesia's Forests: Under Fire. Indonesia's fire crisis is a test of corporate commitment to forest protection
  15. ^ http://www.finnwatch.org/en/news/213-ioi-group-suspected-of-serious-labour-rights-violations IOI Group suspected of serious labour rights violations
  16. ^ Too Green to be True, IOI Corporation in Ketapang District, West Kalimantan Milieudefensie and Friends of the Earth Europe, March 2010
  17. ^ http://www.rspo.org/news-and-events/announcements/notice-to-rspo-members-on-the-suspension-of-ioi-groups-certification NOTICE TO RSPO MEMBERS ON THE SUSPENSION OF IOI GROUP'S CERTIFICATION
  18. ^ https://www.theguardian.com/sustainable-business/2016/apr/09/ioi-malaysian-palm-oil-company-unilever-mars-kellogg-rspo-deforestation Unilever palm oil supplier must suspend all plantation expansion to save reputation
  19. ^ Cuff, Madeleine (2016-08-08). "Palm oil giant IOI Group regains RSPO sustainability certification". The Guardian. Retrieved 27 September 2016. 
  20. ^ A Deadly Trade-Off; IOI's Palm Oil Supply and its Human and Environmental Costs (PDF). Amsterdam: Greenpeace International. September 2016. Retrieved 27 September 2016. 

External links[edit]

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