Jakarta – As Indonesia grapples with balancing economic growth and environmental preservation, a coalition of environmental organisations and think tanks published a policy paper emphasising the urgency of enhancing palm oil governance through a moratorium on new licenses.
The paper, titled “Stopping the Granting of Palm Oil Licenses (Economic & Environmental Perspectives): Ideas for Improving Palm Oil Governance for the Prabowo-Gibran Red and White Cabinet”, highlights that the domestic economic benefits of palm oil expansion remain unevenly distributed, leaving local communities in producing regions behind.
As the world’s largest palm oil producer, Indonesia manages 16.8 million hectares of oil palm plantations, a sector cornerstone of the national economy. The palm oil industry thrives with export revenues totalling USD 37.76 billion in 2022 and USD 29.54 billion in 2023. However, the pressure to expand plantations to meet growing export demands and the ambitions of the country’s biodiesel program have raised concerns about environmental sustainability and food security.
In his recent inauguration speech, President Prabowo Subianto underscored the importance of energy and food self-sufficiency, highlighting palm oil as a key resource for biodiesel production. The government’s proposed B40 to B50 biodiesel development plan requires further expansion of oil palm plantations, which environmental groups warn could accelerate deforestation and threaten food source lands.
Indonesia’s efforts to control the expansion of oil palm plantations are guided by Presidential Instruction No. 8 of 2019, commonly known as the Palm Oil Moratorium. This policy seeks to halt new plantation permits and evaluate existing ones. However, its implementation faces numerous challenges.
During a public discussion on the future of palm oil governance, the Palm Oil Moratorium Coalition emphasised the need for comprehensive economic and environmental analyses. Jesika Taradini, a researcher at Lokahita, noted that the three major islands—Sumatra, Kalimantan, and Papua—have exceeded sustainable thresholds for palm oil cultivation. “Rather than expanding plantations, efforts should focus on environmental restoration in these regions,” she urged.
Economist Nailul Huda of the Center of Economics and Law Studies (CELIOS) highlighted the economic benefits of the moratorium. According to his analysis, a combined moratorium and replanting program could yield substantial economic contributions by 2045, including a projected GDP boost of Rp28.2 trillion and creating 761,000 jobs. “Without these measures, the economic outlook is less favourable,” Huda warned.
Achmad Surambo, Executive Director of Sawit Watch, stressed the urgency of halting new permits for palm oil expansion. He argued that the unchecked growth of plantations, driven by biodiesel policies, poses a significant deforestation risk. “The current plantation area is nearing its limit. To ensure sustainable practices and fair governance, the moratorium is essential,” Surambo said.
Andi Muttaqien, Director of Satya Bumi, criticised existing regulations for failing to resolve overlapping land claims and permit violations. “Weak governance not only harms the environment but also risks substantial tax losses,” he noted, calling for stricter law enforcement and greater transparency.
The discussion also addressed the European Union’s new anti-deforestation regulation (EUDR), which mandates stringent sustainability criteria for palm oil imports. “The moratorium aligns with these international standards, enhancing Indonesia’s market competitiveness while reducing deforestation,” Andi added.
The moratorium is a pivotal step in supporting Indonesia’s climate goals. Sadam Afian Richwanudin, a researcher at Madani Berkelanjutan, emphasised its role in reducing carbon emissions from land-use changes. “Halting new permits will help Indonesia meet its climate targets, particularly in the Forestry and Land Use (FOLU) sector,” he explained.
Beyond environmental benefits, the policy also aims to protect the livelihoods of smallholders and indigenous communities. Olvy Tumbelaka, Senior Campaigner at Kaoem Telapak, highlighted the need for stronger protections to safeguard biodiversity and ensure equitable growth. “A reinforced moratorium will not only preserve critical forests but also improve the welfare of marginalized communities,” Tumbelaka concluded.
As Indonesia navigates its dual goals of economic development and environmental preservation, the path forward hinges on effective governance and sustainable practices. The Palm Oil Moratorium Coalition hopes that the Prabowo-Gibran administration will prioritize these efforts, ensuring that the palm oil industry thrives without compromising the nation’s natural heritage. (nsh)
