PALMOILMAGAZINE, JAKARTA – As the world’s largest palm oil producer, Indonesia plays a strategic role in the global supply chain. The industry contributes approximately 3.5% to the national GDP and provides livelihoods for over 18 million people. However, significant challenges remain, particularly regarding evolving global regulations, including the European Union Deforestation Regulation (EUDR), set to take effect in 2026.
EUDR mandates traceability, a ban on plantation expansion in deforested areas, and strict due diligence compliance. Initially scheduled for 2025, its enforcement has been postponed to 2026.
Despite this delay, Indonesian Business Council (IBC) CEO Sofyan Djalil warns that Indonesia must not remain passive. Instead, the country should use this extra time to strengthen the role of smallholder farmers, who manage 40% of Indonesia’s oil palm plantations. Smallholders are key to improving productivity but are also the most vulnerable to EUDR regulations. Therefore, collaborative efforts across stakeholders are essential to equip them with the necessary regulatory knowledge, technology, and financial support.
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In global debates, palm oil is often blamed for deforestation, yet deforestation in Indonesia predates the palm oil industry. In the 1970s, forest concessions for various purposes led to massive land clearing. Today, the palm oil sector contributes to land restoration by converting degraded land into productive areas.
Given this history, EUDR should not impose unfair standards on palm oil-producing countries like Indonesia. If implemented without balance, the policy risks becoming regulatory imperialism, harming Indonesia’s industry. A cooperative approach between the European Commission and Indonesia is crucial to ensure Indonesian palm oil remains competitive in the EU market.
This issue took center stage at the Collaborative Dialogue during the Indonesia Economic Summit (IES) 2025, attended by Palmoilmagazine.com on Tuesday (February 18, 2025).
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The event was organized by the Global Alliance for a Sustainable Planet (GASP), the Indonesian Business Council (IBC), and Indonesia Palm Oil Strategic Studies (IPOSS). The roundtable gathered 60 key figures, including government representatives, business leaders, and strategic partners, to discuss the future of sustainable palm oil in Indonesia.
With the strategies and commitments discussed, Indonesia has a significant opportunity to lead in sustainable palm oil practices. Aligning economic interests with environmental conservation is the key to ensuring long-term industry sustainability. If successful, Indonesia will not only maintain its position as a global market leader but also reinforce its responsibility in balancing economic growth and environmental sustainability. (P2)
