PALMOILMAGAZINE, JAKARTA – Global demand and consumption of palm oil and its derivatives—for food, bioenergy, and personal care products—continue to rise annually. Today, with production reaching approximately 100 million tons per year, palm oil has become the world’s most strategic vegetable oil commodity, accounting for more than 40% of global vegetable oil needs.
As the world’s largest palm oil producer, Indonesia plays a crucial role in meeting this demand. With over 16.8 million hectares of palm plantations, the country contributes more than 55% of global palm oil supply. This has significantly benefited Indonesia, especially amid rising global prices, which have surged from around US$600 per ton in 2015 to approximately US$1,100 per ton in 2025.
According to Indonesia’s Ministry of Finance, palm oil exports generated US$88.1 billion in foreign exchange in 2024—equivalent to around Rp660 trillion—with figures climbing steadily each year.
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Since the 1980s, Indonesia’s palm oil sector has grown rapidly through collaboration among private companies, state-owned enterprises (SOEs), and smallholder farmers. Various partnership models have helped improve rural economies nationwide. However, the sector still grapples with serious challenges—particularly around land use permits and regulatory uncertainties that hinder sustainable development.
Legal Certainty Is Key to the Future of Indonesian Palm Oil
The Indonesian government, under presidential directive, is attempting to bring order to the palm oil sector by addressing land legality—especially palm plantations located within forest areas. Presidential Regulation No. 5 of 2025 empowers a special task force (Satgas PKH) to reclaim illegally planted palm oil lands and reassign them for legal management.
To facilitate this transition, the government has collaborated with the Ministry of State-Owned Enterprises to assign management of these reclaimed lands to PT. Agrinas Palma Nusantara (Agrinas), a government-owned company. According to the Attorney General’s Office, over 1.1 million hectares of plantations have been seized and transferred under Agrinas’ oversight.
Agrinas’ new role has triggered mixed reactions. Originally established as a contractor and consultancy firm, Agrinas is now overseeing a massive portfolio of palm plantations—an unexpected shift. Yet, this transformation could prove to be a strategic solution amid persistent legal uncertainties faced by the industry. Through clear, enforceable regulations, the state is providing much-needed legal clarity.
- Agrinas Palma Nusantara: A Strategic Solution for Sustainable Palm Oil
As a government-backed entity, Agrinas embodies Indonesia’s official intervention to address longstanding problems in the palm oil industry. It offers five key contributions to the sustainability agenda:
- Legalizing Previously Disputed Lands
Agrinas facilitates the formal recognition of lands previously deemed problematic. By granting these areas legal status, the government can remove overlapping administrative designations between plantations and forest zones. This calls for urgent issuance of new regulations to formalize land use and revise national forest zoning maps. - Addressing Deforestation Allegations
With Agrinas in control of former forest-plantation overlap zones, the government can clearly demonstrate that deforestation issues are being resolved. This helps refute global accusations that Indonesian palm oil expansion is tied to forest encroachment. - Unlocking Full Sustainability Certification
Historically, efforts to achieve 100% sustainability certification were obstructed by land status disputes. With state-managed land reform led by Agrinas, Indonesia can now push forward with certifying all plantations under national and international standards. - Guiding Responsible Future Expansion
With updated spatial maps, the government can support the expansion of energy and food estates in non-forest ecological zones. Agrinas will oversee such developments in line with strict environmental and legal compliance. - Setting a Model for Sustainable Plantation Management
Agrinas has the potential to become a national benchmark for law-abiding, sustainable palm oil operations. This includes advanced agronomic practices such as high-quality seed use, integrated pest management, efficient fertilization, and early harvest strategies (Early Harvest Programme/EHP). The company can further boost standards through partnerships with experienced private-sector players.
Collaborating for National Palm Oil Growth
To succeed, Agrinas must actively build alliances with all stakeholders in the palm oil value chain—private companies, cooperatives, and smallholders—to ensure robust national production and ongoing contributions to Indonesia’s economic development.
The success of Agrinas would signify a major win for the administration of President Prabowo Subianto on two strategic fronts:
- Resolving complex and longstanding land-use conflicts through a comprehensive policy framework.
- Safeguarding the palm oil sector as a vital, sustainable pillar of Indonesia’s national economy.
In essence, Agrinas represents not just a managerial solution, but a national vision for sustainable growth, legal reform, and international credibility in the palm oil industry. (*)
By: Edi Suhardi – Sustainability Analyst
