Overhauling Palm Oil Governance: A Crucial Imperative

Palm Oil Magazine
Doc. Sawit Fest 2021 / Novia Febri / The issue of inadequate governance in Indonesia's palm oil industry has become increasingly apparent with the proliferation of palm oil plantations authorized by various ministries and institutions.

PALMOILMAGAZINE, JAKARTA – The issue of inadequate governance in Indonesia’s palm oil industry has become increasingly apparent with the proliferation of palm oil plantations authorized by various ministries and institutions. The absence of official data regarding these plantations exacerbates the problem.

Furthermore, critics often point out that the growth of palm oil plantations in Indonesia has been linked to deforestation. Acknowledging this concern, the Indonesian government initiated corrective measures. In fact, efforts to address this issue have been underway since 2011 with the introduction of the Indonesian Sustainable Palm Oil (ISPO) initiative.

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This regulatory framework encompasses multiple sectors involved in the palm oil industry, aiming to promote sustainability and responsible practices.

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From the period, it is known that palm oil governance is in a mass because every ministry/institution published regulations about palm oil and there are many overlapping ones. As the result, ISPO gets dragged.

To deliver space in improving palm oil governance, by the late September 20218, the government in the era of Susilo Bambang Yudhoyono ordered to stop palm oil development nationally to track down every issue and what regulation were overlapping.

But palm oil issues keep running because there is no the best solution to manage this commodity nationally. In 2019 the government published President’s Instruction Number 6 / 2019 about Rencana Aksi Nasional Kelapa Sawit Berkelanjutan (RAN-KSB). The reason was about to accelerate the previous policy and ISPO certification for planters nationally.

In 2020, the degree of the regulation was escalated to be President’s Regulation Number 44 / 2022 about Sustainable Palm Oil Plantation Certification in Indonesia or known as Indonesian Sustainable Palm Oil (ISPO). But the issues keep raising. The acceleration to solve palm oil plantations in forest regions popped still.

On Friday (14/4/2023) President Joko Widodo signed the publication of President’s Decision of Indonesia Number 9 / 2023 about Taskforce for Improving Palm Oil Industry Governance and Optimizing Revenue.

The decision was taken by saying that industrial development in palm oil – bases in Indonesia keeps increasing in productivity but according to audit result, there were issues in the governance and potentially lose the revenue from tax and/or non-tax.

To follow up the policy, the government encouraged every planter to get self-reporting through Sistem Informasi Perizinan Perkebunan (Siperibun). Every planter should qualify every permit, such as, location, property tax, business rights, and plantation business permit.

The government confirmed that the system would be integrated with other ministries/institutions, every government’s instance would cooperate both in Ministry of Agriculture, Ministry of Agrarian Affairs and Spatial/National Land Agency, Ministry of Finance, and Badan Pemeriksa Keuangan dan Pembangungan, and others that Coordinator Ministry in Maritime and Investment coordinates.

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