PALMOILMAGAZINE, JAKARTA – As the government announces plans to add 2.3 million hectares of new palm oil plantations as part of its national energy security strategy, the most fundamental question comes from upstream: is Indonesia’s palm oil governance healthy enough to bear an expansion of that scale?
The statement by the Director of Plantation Downstreaming at the Ministry of Agriculture, Kuntoro Boga Andri, regarding the government’s commitment to expand palm oil areas—following President Prabowo’s directive—at first glance sounds like a logical continuation of the grand narrative of downstreaming, renewable energy, and strengthening the national economy.
In the development framework, palm oil is simply too significant to ignore. It generates foreign exchange, supplies biodiesel feedstock, supports the oleochemical industry, and sustains millions of smallholders across Indonesia.
Yet behind the optimism lies one unresolved issue: Indonesia has not fully managed the palm oil plantations it already has.
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The Forest Area Control Task Force (PKH) has taken action against nearly 4 million hectares of illegal palm oil plantations inside forest zones. That figure is not small—it is even larger than the expansion target now being promoted. This means that before talking about opening new land, Indonesia is still dealing with an old legacy of plantations with unclear land status, problematic legality, and governance systems that have yet to reach a sound structure.
At this point, the 2.3 million-hectare expansion plan should be viewed not merely as an economic agenda, but as a political test of natural resource governance.
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A Giant Called Palm Oil, with Cracked Foundations
Indonesia today is the world’s largest palm oil producer. Its plantation area in 2024 is estimated at between 16.01 million and 16.83 million hectares, with Riau as the main epicenter at around 2.82 million hectares, or nearly one-fifth of the national total.
But land size is not the whole story.
Indonesia’s palm oil output could still be significantly increased through intensification rather than extensification. In other words: improving existing plantations instead of rushing to clear new forests.
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Replanting aging trees approaching 30 years old, using superior seeds, strengthening biotechnology research, digitalizing plantations, improving mill efficiency, and applying precision agronomy are ecologically more rational pathways. Productivity can rise without opening a single hectare of new land.
The problem is that even at the most basic governance level, the backlog remains substantial.
Certification under Indonesian Sustainable Palm Oil (ISPO)—the national sustainability standard—appears to have grown numerically. By late 2021/early 2022, more than 760 ISPO certificates had been issued. But the picture changes drastically when looking at smallholders.
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Out of 6.2 million hectares of smallholder palm plantations in 2023, only 81 ISPO certificates had been issued, covering 58,289 hectares. That means only around 0.3 percent of independent smallholders were certified.
This figure is not merely low. It is an alarm bell.
The Chairman of the Indonesian Palm Oil Farmers Association (Apkasindo), Gulat Manurung, has argued that smallholders actually meet sustainability standards in ecological, social, and economic terms. The main obstacle lies in legality and land governance. Around 76.64 percent of smallholder plantations are located inside forest areas.
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That means most of Indonesia’s palm farmers operate in a legal grey zone.
And the European Union is watching.
The Shadow of EUDR and the Trace of Deforestation
The European Union Deforestation Regulation (EUDR) is simple but firm: products entering the EU market must not originate from land deforested after December 31, 2020.
Palm oil is on the monitoring list, alongside coffee, cocoa, soy, timber, and beef.
For Indonesia, the implications are substantial. Palm plantations located inside forest areas are estimated at 3.1–3.4 million hectares. These are spread across conservation forests, protected forests, limited production forests, regular production forests, and convertible production forests.
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Some are in the process of legalization through forest release mechanisms. But many others remain suspended without certainty.
When EUDR comes fully into force—December 30, 2026 for large and medium companies, and June 30, 2027 for micro and small businesses—this issue will no longer be domestic. It becomes a market access problem.
Indonesia’s palm oil will not only be required to be productive, but also traceable, legal, and free from deforestation footprints.
That is where the narrative of new land expansion becomes increasingly complicated.
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Peatlands: A Threatened Carbon Engine
There is another layer of the issue—both literally and ecologically: peatlands.
Many Indonesian palm plantations stand on peat landscapes. Not all are shallow peat that may still be relatively manageable for cultivation. A large portion lies on medium to very deep peat—ecosystems that store extraordinary amounts of carbon.
Research published in Nature Sustainability on November 18, 2021 showed that peatlands in Kalimantan and Papua are among the highest carbon concentration areas on Earth. If that carbon is released through drainage, fire, or land conversion, the impact is no longer local—it becomes global.
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Recovery would take not years, but centuries.
In Sumatra, an estimated 3.27 million hectares of palm plantations are located on medium to very deep peat. In Kalimantan, the figure is around 4.53 million hectares.
In total, plantations on peatlands potentially threatening carbon reserves are estimated at 7.82 million hectares, or around 53.56 percent of Indonesia’s total palm area.
With such a composition, palm oil expansion without spatial discipline risks becoming a carbon bomb.
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Is There Still Room? Yes. But…
Theoretically, room for expansion still exists.
Data from The State of Indonesia’s Forest (SOFO) 2020 shows Indonesia still has 10.2 million hectares of convertible production forest (HPK) that can administratively be allocated for non-forestry development, including plantations.
If only 30 percent were utilized, around 3 million hectares of new space would be available—even exceeding the 2.3 million-hectare target.
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The potential production increase would be significant: around 25 million tons of palm oil annually.
But past experience offers costly lessons.
The government once revoked palm oil permits covering 1.788 million hectares held by 137 companies across 19 provinces—from Papua and West Papua to Central Kalimantan and Sumatra—due to various violations, ranging from permit misuse to alleged use of concession areas for other purposes, including mining.
This means Indonesia’s issue is not merely a shortage of land. The core problem is governance.
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If Palm Oil Must Expand
If the 2.3 million-hectare expansion truly becomes a national agenda, at least three guardrails must not be crossed.
First, avoid peatlands, especially medium to deep peat. These ecosystems are too important as global carbon sinks to be sacrificed for short-term expansion.
Second, avoid tenure conflicts, especially in customary areas such as Papua. Without fair resolution, expansion will only lengthen Indonesia’s list of agrarian disputes.
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Third, ensure permits are granted only to credible companies with financial strength, technical capacity, and long-term commitment—not firms merely hunting concessions.
Because in the end, the real question is not whether Indonesia still has land for palm oil.
The real question is whether Indonesia has learned enough from the old palm oil governance model before opening a much larger new chapter. (*)
Author: Pramono Dwi Susetyo / Former employee of the Ministry of Environment and Forestry.
Disclaimer: This article reflects the personal views of the author and is entirely his own responsibility.
