23/06/2025 (The Edge Malaysia) - The travails of Wilmar International Ltd in Indonesia reflect the perils of doing business in the world’s largest producer of crude palm oil.

Five subsidiaries of Wilmar were accused of illegally profiting by exporting cooking oil when there was a ban imposed by the Indonesian government in 2022. Wilmar and its subsidiaries were cleared by the lower courts.

Indonesia’s Attorney-General’s Office, however, successfully appealed against the Supreme Court’s decision. Subsequently, Wilmar had to place a deposit of IDR11.88 trillion (US$729 million) with the courts until the suit was disposed of.

The decision had an impact on PPB Group Bhd’s (KL:PPB) share price, which took a hit. Sentiment was dampened because of concerns about the short-term implications on the group’s earnings. PPB has an 18.8% stake in Wilmar but derives almost 75% of its earnings from the latter.

In reality, the deposit placed with the Indonesian courts is the least of Wilmar’s problems. The company’s balance sheet and operations should be able to absorb the sum placed with the courts.

The bigger implication arising from the suit are allegations of corruption in the lower courts in Indonesia that resulted in a ruling that favoured Wilmar.

Singapore-listed Wilmar vehemently denies the allegations of corrupt practices and contends that all actions taken by the subsidiaries were in good faith and free from any corrupt intent. The company also reiterated that all acts carried out by the subsidiaries in relation to the export of cooking oil were done in compliance with regulations.

Going forward, even if Wilmar wins the case, which will be an uphill task, will the group continue to invest in Indonesia? It is not that Wilmar is without options, considering that the agribusiness giant derives a substantial part of its revenue from China and other parts of the world.

https://theedgemalaysia.com/node/759952