Indofood Agri Resources Ltd. Clarifies Forestry Fines and Regulatory Risks

Key Points for Investors:

• Indofood Agri Resources Ltd. (“the Company”) has responded to queries from the Singapore Exchange Regulation (SGX RegCo) regarding media reports on substantial forestry-related fines imposed by Indonesian authorities.
• The Company’s Indonesian-listed subsidiary, PT Salim Ivomas Pratama Tbk (“SIMP Group”), has paid administrative charges amounting to Rp2.34 trillion (approximately S\$179 million) to a government escrow account, pending final resolution.
• The fines relate to recent changes in Indonesian regulations and are associated with alleged contraventions involving land legal status and forestry area usage.
• Payment was made to the Indonesian Forest Area Enforcement Task Force (Satgas PKH) by the deadline of 30 December 2025.
• The Company is in ongoing discussions with the authorities and is defending its position, aiming for a satisfactory resolution.
• The Company has not confirmed whether the fines (reported to be around US\$136 million) are considered material for disclosure under Listing Rule 703, stating that an announcement will be made when the outcome is conclusive.

Details and Implications for Shareholders

The Board of Indofood Agri Resources Ltd. addressed direct questions from SGX RegCo following a Reuters article published on 15 January 2026, which mentioned that the Company’s palm oil units had paid forestry fines reportedly equivalent to US\$136 million. This prompted SGX RegCo to seek clarifications on the impact and materiality of these fines.

Background to the Fines

The Company highlighted that regulations in Indonesia’s plantation sector are frequently updated, including changes in spatial planning and forest area designation. The fines levied against SIMP Group arise from compliance with Presidential Regulation No. 5 of 2025 and Government Regulation No. 45 of 2025, as well as Law No. 6 of 2023 on Job Creation (Articles 110A and 110B).

The Indonesian Ministry of Forestry imposed the charges on 1 December 2025. The total amount paid (Rp2.34 trillion / S\$179 million) was deposited into a government escrow account managed by Satgas PKH, the Forest Area Enforcement Task Force, by 30 December 2025. This payment was made in good faith, and the matter remains unresolved pending further discussions and clarification with authorities.

Ongoing Process and Disclosure Considerations

The Company emphasized that it is actively engaged with authorities and will continue to defend its position. A final outcome is still pending. The Board stated that it will make an appropriate disclosure once the situation is conclusive.

Regarding the materiality of the fines and the requirement for public disclosure, the Company has not explicitly confirmed whether the sum paid is considered material for the purposes of Singapore Exchange listing rules. The Company has deferred a final assessment until a resolution with the authorities is reached, and has assured that investors will be promptly updated once clarity is achieved.

Potential Price-Sensitive Issues for Shareholders

• Financial Impact: The Rp2.34 trillion (S\$179 million / US\$136 million) fine represents a significant outflow of cash and could have a material impact on the SIMP Group’s and the Company’s financial position, profitability, and cash flow, depending on the final outcome and whether the payment is ultimately forfeited or refunded.
• Regulatory Risk: The ongoing regulatory changes and enforcement actions in Indonesia’s plantation sector could signal higher compliance costs and operational risks for the Company and its subsidiaries going forward.
• Disclosure and Transparency: The lack of immediate clarity on materiality and disclosure obligations may create short-term uncertainty for shareholders and the market until a final resolution is reached and a formal announcement is made.

What Shareholders Should Watch For

• Any formal announcement from the Company on the outcome of discussions with Indonesian authorities or the final status of the fines paid.
• Updates on the Company’s financial results, including the impact of the fines and regulatory changes on its earnings and cash position.
• Further developments in Indonesian regulations affecting the plantation and forestry sector, which may affect Indofood Agri Resources’ future compliance obligations and costs.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own independent research and consult professional advisers before making investment decisions. The above summary is based on the Company’s official responses and may be subject to further updates as more information becomes available.

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