Indonesia land reform raises uncertainty for Malaysian planters with exposure there — CIMB Securities

KUALA LUMPUR, 27 SEPTEMBER 2026 —

Malaysian-listed plantation firms with significant operations in Indonesia now face heightened regulatory uncertainty after the country’s parliament approved a new Agrarian Reform Law on Tuesday, according to CIMB Securities.

The law establishes a framework for land redistribution and caps on ownership, though critical details—including maximum landholding limits for companies and how a provision requiring at least 20% of certain plantations to be made available for reform—remain unresolved pending implementing regulations. CIMB has not adjusted earnings forecasts or land valuations for affected firms, stating the risk is regulatory uncertainty rather than immediate land or revenue losses.

Among Malaysian plantation companies with Indonesian exposure, SD Guthrie Bhd, Genting Plantations Bhd and Kuala Lumpur Kepong Bhd hold the largest operations, according to CIMB. The research house expects the impact to hinge on whether the 20% redistribution rule applies retroactively to existing plantations and how landholding caps will be enforced.

Indonesia’s Agrarian Affairs and Spatial Planning Minister Nusron Wahid said implementing rules—including minimum and maximum landholding limits—will be finalised in subsequent regulations. The law also establishes a presidential oversight body to manage implementation, supervision and conflict resolution, though enforcement mechanisms remain unclear.

CIMB said it does not anticipate an across-the-board 20% reduction in existing landholdings, but the final regulations will determine whether companies must cede portions of their plantations. The research house noted that the law’s broader framework could exacerbate land disputes and increase compliance costs for foreign operators.

Bloomberg previously reported broader risks to Indonesia’s plantation and property sectors, but CIMB’s latest assessment focuses on Malaysian-listed firms. Among CIMB’s coverage, SD Guthrie, Genting Plantations and KLK have the largest absolute exposure to Indonesian plantations, while IOI Corp Bhd has smaller relative exposure. Johor Plantations Group Bhd, Ta Ann Holdings Bhd and Hap Seng Plantations Holdings Bhd operate exclusively in Malaysia.

Analyst sentiment remains mixed. As of Friday, Bloomberg consensus showed 17 "buy" calls and three "hold" calls for SD Guthrie, with a 12-month target price of RM7.68. Genting Plantations had 10 "buy" calls and two "hold" calls, with a target of RM6.81, while KLK had nine "buy" calls, 10 "hold" calls and one "sell", with a target of RM24.57.

Separately, India’s decision to lower import duties on major edible oils could provide modest support for Malaysian crude palm oil (CPO) demand. Effective Thursday, India cut the basic customs duty on CPO and crude soybean oil to 5% from 10%, while eliminating the 10% duty on crude sunflower oil. The move aims to reduce import costs and ease domestic edible oil prices.

CIMB said the lower CPO duty should reduce landed costs and support Indian palm oil imports, though the larger tariff cut on sunflower oil could limit demand gains for palm oil. India accounted for about 17% of Malaysia’s palm oil export volume in 2025, and while lower duties may support CPO prices, CIMB expects the benefit to Malaysian planters to be modest.

The research house maintained its CPO price forecasts at RM4,450 per tonne for 2026 and RM4,550 per tonne for 2027, suggesting that while India’s policy shift may provide some price support, it is unlikely to drive a significant increase in Malaysian export volumes. The primary benefit for Malaysian planters would likely come from firmer CPO prices rather than direct volume growth.

Related: CIMB Securities · Nusron Wahid · Kuala Lumpur