Palm oil company fined US$30m for clearing 1,000 hectares in Indonesia

An Indonesian court has ordered a palm oil company to pay almost US$30 million to the state for illegally clearing peatland in a "historic" ruling, government lawyers said yesterday.

The Meulaboh district court on Sumatra island ruled on Wednesday that Indonesian company Kallista Alam had illegally burned vegetation on 1,000 hectares of peatland in Aceh province to clear it for a palm oil plantation.

In the civil case brought by the Ministry of Environment, the court ordered the company to pay 114.3 billion rupiah (HK$73 million) in losses to the state and 252 billion rupiah to rehabilitate the land it destroyed.

Watch: The effect of deforestation in Indonesia

The forest was protected under several laws, including a presidential decree suspending new permits to log peatland and some other types of forests across the country.

Using fire to clear land is also illegal. The practice has sent choking haze across parts of Southeast Asia in recent years.

"This is a historic moment for law enforcement on environmental issues in Indonesia. We hope it will deter plantation companies from damaging the environment," the environment ministry's lawyer, Syafruddin, said.

The case was seen as a test of the moratorium on logging permits and of reform in the country's corrupt and mismanaged forestry sector, which has allowed destruction of habitats to plant palm oil and timber.

Environmental groups welcomed the decision, saying it was a sign of improved law enforcement and would set a precedent.

"This is a clear message to companies working in Aceh who think they can destroy protected forests and get away with it," Friends of the Earth Indonesia chairman Muhammad Nur said.

Indonesia, home to one of the world's largest expanses of tropical rainforest, is also the world's biggest palm oil producer.

The company's lawyer, Alfian Sarumaha, said Kallista Alam would likely appeal the ruling.