Navigating the Balance Between Forest Preservation and Palm Oil Industry Governance in Indonesia

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Illustration of oil palm plantation. Photo by: Sawit Fest 2021 / Yayan Saputra

PALMOILMAGAZINE, JAKARTA The government is confronted with a dilemma—choosing between preserving forests or supporting palm oil plantation companies. The decision leans towards imposing administrative sanction fines as a means of addressing this issue. Hence, transparency in policy implementation becomes crucial.

The government grapples with the challenge of enhancing governance in both palm oil plantations and forests. This predicament revolves around the choice of conserving the remaining forests in Indonesia, covering approximately 125.8 million hectares, or addressing the illegal operations of palm oil plantations within forested areas through administrative sanction fines as a form of non-tax revenue (NTR).

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In the forestry and land sectors, the government has introduced policies aimed at reducing greenhouse gas emissions to combat climate change. This effort is outlined in “Indonesia’s FOLU Net Sink 2030,” governed by President’s Regulation Number 98/2021, with the ambitious target of achieving net-zero emissions by the year 2030.

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On the other hand, the publication of Undang-Undang Cipta Kerja (UUCK) delivered good news for stakeholders that illegally operated in forest regions, particularly in palm oil sectors. Chapters 110A and 110B of UUCK describe the ease of getting amnesty or bleaching for palm oil plantations in forest regions before UUCK was published until November 2, 2023, or three years since UUCK was published.

The bleaching meant to free every stakeholder from forestry criminal sanction regulated in Laws Number 41/99 about Forestry and Laws Number 18/2013 about Forest Damage Eradication and Prevention. As a result of the change, the stakeholders are obliged to pay an administrative fine in the form of PSDH-DR (Provisi Sumber Daya Hutan-Dana Reboisasi) in Chapter 110A UUCK and an administrative fine in PNBP (Pendapatan Negara Bukan Pajak) or non-tax revenue (NTR) in the forestry sector, which is calculated by its own formula according to Chapter 110B UUCK.

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The Ministry of Environment and Forestry got inventory about palm oil plantations in forest regions. They laid on about 3.4 million hectares. 6,72 million hectares, or 41 percent, were the smallholders’ plantations, and 9,66 million hectares, or 59 percent, belonged to big private and government companies.

MEF also confirmed that from June 2011 to August 2023, the institution published 14 decisions of the Minister of Environment and Forestry that contained 3.257 legal subjects of stakeholders in forest regions. They were companies, personals, smallholders’ groups, cooperation, villages, districts, cities, provinces, and central institutions. The legal subjects were in Riau Province the most, and then in Central Kalimantan Province.

From palm oil plantation mastery in forest regions, it was found that 2,1 million hectares, or 61.76 percent, belonged to big private and government companies, while 1,3 million hectares, or 38.23 percent, belonged to smallholders in the forms of personal, group, and union.(*)


Ahmad Zazali, SH., MH./Chairman of Pusat Hukum dan Resolusi Konflik (PURAKA)

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