Prabowo reinvigorates the development of oil palm plantations
The President’s statement marks a turning point for Indonesian palm oil after years of moratorium on the issuance of new permits and licenses of oil palm plantation development since 2011.
06/01/2025 (The Jakarta Post) - One of the five most important points of policy President Prabowo Subianto made at the National Development Planning Consultation in Jakarta on Dec. 30 urges massive expansion of oil palm plantations because of the strategic role of this commodity in the Indonesian economy and in the global supply of vegetable oil.
“I noticed during my official visits overseas how so many countries are concerned about being unable to get enough palm oil supplies from Indonesia due to a steady increase in the international market demand for that commodity,” the President said.
He wondered why massive deforestation has often been blamed on this commodity when palm oil is harvested from trees with many leaves that absorb carbon dioxide.
“We therefore should massively expand our oil palm plantations and I hereby order provincial governors, regents and all law enforcement agencies to protect existing oil palm estates. They are the nation’s assets,” Prabowo pointed out.
Even before Prabowo was elected and inaugurated, he often pointed out the strategic role of palm oil as a source of food, as well as numerous other consumer goods and biofuel. He has lambasted the perpetual negative international campaign, especially in Europe, against the commodity.
Many national and international studies have also noted the increasing role of palm oil not only in Indonesia’s economy, but also as a source of more than 40 percent of the world’s consumption of vegetable oil.
Data at the Industry Ministry show that the palm oil industry has spread its growth centers to Sumatra, Kalimantan and Sulawesi, greatly contributing to reducing poverty in rural areas while creating employment opportunities for many. Indonesia is now the world’s largest palm oil producer with a total output of 55 million tonnes in 2023 commanding an impressive share of 54 percent of the global market for palm oil.
Palm oil use in biodiesel accounted for 46 percent of total consumption last year, with the food industry taking up 44 percent and the oleochemical industry 10 percent. Global consumption of palm oil for food, fuel and other value-added products has been growing exponentially, but unfortunately the demand does not match up with proportionate growth in production.
More encouraging in terms of equality, about 40 percent of Indonesia’s total oil palm plantations of around 16.5 million hectares are owned by 6.7 million smallholders and the palm oil industries directly and indirectly employ around 16 million people.
Deforestation, caused by the recklessly massive opening of oil palm plantations since the early 1990s, soon after private investors were allowed to enter the sector, has given Indonesia a notorious reputation as one of the world’s biggest carbon emitters.
However, the global perception of deforestation and palm oil in Indonesia has drastically changed thanks to relentless public education and improved governance. Experts agree that Indonesia has been able to contain the degradation of primary forests and conservation areas, and palm oil should not be linked to deforestation.
The President’s policy statement marked a turning point for Indonesian palm oil after years of moratorium on the issuance of new permits and licenses of oil palm plantation development since 2011.
This drastic shift of policy is also driven by the awareness of the strategic value of palm oil to the nation’s development and economic growth, as well as recognition that palm oil is proven to be one of the most environmentally-friendly commodities.
Hence, the expansion of sustainable oil palm plantations is seen as one of the best alternatives the country has to achieve the Sustainable Development Goals (SDGs) with optimum socioeconomic benefits for millions of beneficiaries with the least carbon footprint.
But the new policy must be supported by guidelines to ensure that the massive expansion of oil palm plantations will be conducted according to the principles of sustainability, as enshrined in the environment, social and governance (ESG) concept. This concept also has been stipulated in the Indonesian Sustainable Palm Oil (ISPO) program which was launched in 2011.
Without clear-cut policy guidelines, Prabowo’s statement could be interpreted as Indonesia’s resolute ambition to boost its palm oil production even at the expense of the environment. Prabowo has committed to increasing the mandatory palm oil content in the biodiesel mix to 40 percent (B40) in 2025, which will consequently increase demand for palm oil. To meet such unprecedented demand growth, the expansion of oil palm plantations is imperative.
The Indonesian Palm Oil Association (GAPKI) has confirmed there is a vast area of low carbon stock land that can be converted into oil palm plantations without touching primary forests. Technically, oil palm cultivation can still be achieved in any type of land with varied agronomic inputs and practices.
We are of the opinion that Prabowo himself has been briefed by his ministers about the existence of a vast degraded area that can be converted into oil palm estates.
Prabowo’s call to boost upstream palm oil production signifies the acknowledgement of palm oil as a strategic national asset that should be well protected and well managed to sustain its economic and social benefits for Indonesian people.
But the ministers of forestry, agriculture and environment need to announce detailed information on the locations of the degraded areas which are fit to grow oil palms. Such transparency is necessary to enhance the traceability of our palm oil.
The government should refocus its efforts to increase production sustainably by developing new estates in Papua, Kalimantan and Sulawesi, but we need to ensure operational sustainability through the designation of special areas for new oil palm plantations.
We hope that the concerned ministries will soon take action to follow through and enact special regulations as a guideline for new oil palm cultivation in the regions. Such binding guidelines are essential to further boost both the upstream and downstream palm oil industry.
The new regulations, however, must be supported by a long-term development road map, which requires better governance and expanded research and development to produce high-yield seeds, as well as integrated downstream and upstream processing policy under the ESG principles of sustainability standards.
Put another way, the government cannot run the palm oil business as usual. It is imperative to improve and enforce stricter sustainability standards as prerequisites for new cultivations in the oil palm cultivation-designated areas. With such conditions, the Indonesian palm oil will continue to thrive sustainably without unnecessary controversy.