The Wider Perspective on Palm Oil in Indonesia

SINGAPORE, June 2, 2010 - Indonesian Economy

Palm oil is an increasingly important industry for Indonesia. In 2005, it
accounted for US$ 3.8 billion of exports, or 6% of non oil and gas exports of
the country. In 2009, it reached US$ 10.4 billion worth of exports or 11% of
Indonesia's non oil and gas exports.

    In US$ billion                        2005   2006   2007  2008   2009
    CPO & Derivatives Exports - Indonesia  3.8    4.8    7.9  12.4   10.4
    Non Oil & Gas Exports - Indonesia     66.4   79.6     92 107.9   97.5
    In %                                     6%     6%     9%   11%    11%

Alleviation of Poverty

Palm oil has been widely acknowledged as an effective industry
for alleviating poverty and for efficient land use in developing nations.
Plantation management and harvesting of oil palm fruit are labour intensive
activities, and the industry has become an important source of employment,
providing direct and indirect jobs for approximately 4.5 million persons.

The industry is composed of small holders and large estate
plantations. In Indonesia, small holders owned 39% of the total palm area in
2008, according to the Indonesian Department of Agriculture, while private
plantations owned 53% and the government, 8%. Small holders represent 33% of
the total palm oil production of the country.

In accordance with Indonesian government policy, oil palm plantation
companies, which are known as nucleus, are encouraged to develop new
plantations that will be owned and operated by local small holders. This form
of assistance to local small holders is generally known as the "Plasma
Program". Under the Plasma Program, the nucleus is committed to purchase
Fresh Fruit Bunches (FFB) from the plasma at formula prices set by the
Indonesian government, taking into account the costs incurred by the
developer in processing and selling the FFB. Since the 1980s, the Indonesian
government supports the financing of the Plasma Program, through
government-owned banks, and now private banks, with the approval from Bank
Indonesia and Directorate General of Plantation.

Contribution to Communities

The Indonesian palm oil industry makes a significant contribution to the
local communities. In the case of Golden Agri-Resources Ltd ("GAR"), the
parent company of PT SMART Tbk ("SMART"), one of the largest palm-based
companies in the world, the company provides funding to build and maintain
schools and other educational facilities in the plantations. This complements
the efforts of local authorities to provide a good education to employees'
children as well as to children living near our plantations. To date, SMART
has constructed and manages more than 125 schools with over 1,000 teachers
catering to more than 20,000 students; in areas in the heart of plantation
estates which have few schooling options. Free transport to and from school
is also provided for students who need it.

The company also seeks to meet the needs of the employees and the people
living near the operations, by building and maintaining public infrastructure
such as roads and bridges, health clinics, and places of worship such as
mosques and churches; providing the facilities and know-how to run
cooperatives that ensure basic necessities are available at affordable
prices; constructing well-built dwellings and sporting facilities; and
providing financial help for communities to celebrate festive and religious
events. The company also helps to develop micro-economies by providing
indirect employment to local entrepreneurs near estates, for example, by
using local transporters to move products, and engaging local contractors for
developing new plantations.

Uses of Palm Oil

Palm oil is known for its multiple uses, in food, healthcare
products, cosmetics and biofuels. It is an inexpensive ingredient to a
multitude of essential items. Palm oil is also a staple part of the national
diet in Indonesia. The principal domestic use is cooking oil at home and by
street vendors. It is also used in solidified spreads and as an ingredient in
various processed foods.

Palm oil also has several nutritional benefits. The product is high in
mono-unsaturated fats. It does not require hydrogenation to achieve a solid
state and avoids the creation of the trans-fatty acids which are considered
harmful to human health. It also contains carotenes (vitamin A) and vitamin
E.

Palm Oil versus Other Vegetable Oils

Palm oil is the most environmentally sustainable vegetable oil
available. Only 0.26 hectares of land is required to produce one tonne of
palm oil. Meanwhile soybean, sunflower and rapeseed require 2.2, 2.0 and 1.5
hectares, respectively, to produce one tonne of oil. In addition, palm oil
generates nearly 10 times the energy it consumes, compared to a ratio of 2.5
for soybeans and 3.0 for rape oilseed.

Palm oil is also an effective sink to absorb carbon dioxide as
a managed forest. Oil palm plantations are leafy, composed by thousands of
trees that can live more than 25 years, and have a positive carbon impact to
the environment.

Our Role and Commitment

SMART remains committed to achieving sustainable palm oil
production. In particular, the company is committed to conserving High Carbon
Stock land, namely primary forest and peat land; as well as biodiversity on
land assessed as having High Conservation Value (HCV). These commitments were
announced on 4 February 2010, and apply to all plantations owned and managed
by GAR. The company does not develop land on primary forests and peat land.
SMART only develops on degraded land that does not have HCV. In addition,
planting oil palm trees in degraded land has a positive carbon impact on the
environment.

SMART complies with national laws, regulations and the
principles and criteria of the Roundtable on Sustainable Palm Oil (RSPO). It
is a RSPO member since 2005, and is already in the process of RSPO
verification. GAR seeks to certify all of its palm oil operating units by
2015.

SMART is a pioneer in zero burning policy; it established a zero burning
policy in 1992. The Indonesian government subsequently established the same
policy in 1995.

SMART is committed to conserving the endangered orang-utan, and together
with the leading environmental and orang-utan conservation organisations and
the Indonesian Forestry Department, plays an active role in the national
orang-utan Working Group in drafting the Strategy and Action Plan to conserve
the orang-utan. To date, the company has set aside a 1,400 ha sanctuary in
Central Kalimantan for an orang-utan habitat.

In addition, the company has also taken the lead in the International
Conference on Palm Oil and Environment ("ICOPE"), which was hosted by SMART
for the second time in February 2010. More than 400 scientists and
practitioners from 14 countries participated in this important forum for
experts to share best practices in an industry that is always evolving. This
was again co-organised with Centre de Coopération Internationale en Recherche
Agronomique pour le Dévelopement ("CIRAD"), France, and WWF.

For further information, please contact: Pelham Bell Pottinger Asia, Carolina Ruhman / Ang Shih-Huei, Tel :+65-6333-3449, Mobile :+65-8133-7504 / +65-9189-1039, Email :cruhman at pelhambellpottinger.asia / sang at pelhambellpottinger.asia