Effectiveness of Indonesian palm oil moratorium disputed
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Effectiveness of Indonesian palm oil moratorium disputed

The Indonesian government has placed a temporary ban on the development of its lucrative palm oil industry as it seeks to review existing concessions and sort out land ownership problems.

The three-year moratorium, based on a presidential instruction issued on Sept 19, orders five ministries, the state investment coordinating body BKPM and regional governments to conduct a full review and evaluation of the sector.

The BKPM has been ordered to halt issuing new investment permits, and the environment and forestry ministry will no longer consider land-swap usage licences.

The agriculture ministry, meanwhile, has been ordered to ensure that all existing plantations meet the Indonesia Sustainable Palm Oil (ISPO) management standard and certification issued by the government.

The announcements represent a new attempt by Jakarta to counter what it sees as a "black campaign" by the European Union against Indonesia's most important industry. The EU is looking at ways to gradually reduce the use of palm oil in biofuels to meet its renewable energy target by 2030.

European lawmakers and consumers, meanwhile, remain highly concerned about the impact of large-scale oil-palm plantations on the environment.

"The recent palm oil moratorium is a much welcomed step," the EU Ambassador to Indonesia, Vincent Guérend, said in a statement last Thursday.

Palm oil is and will remain a key commodity for global companies and consumers, he said, to the extent that it can be beneficial to the people and the planet. The drive to sustainability, he said, requires fair and transparent participation of small, responsible producers, on the same or better footing as large businesses.

"The EU believes current approaches can of course be improved, and will maintain an intense dialogue with producing countries in this endeavour," he said.

Environmental activists, while welcoming the announcement, have expressed scepticism about the effectiveness of the moratorium, which will be reviewed every six months.

The Indonesian Forum for the Environment (Walhi) said it welcomed the presidential instruction as a good start for natural resources management restructuring.

It also said that efforts to boost plantation productivity should be geared toward providing support to smallholders.

"Now that we have this policy, we urge the government to review regulations that obstruct law enforcement efforts and therefore render this policy ineffective," Walhi's forest and plantation campaign manager, Fatilda Hasibuan, told Asia Focus.

The government, she added, needed to show a greater commitment to closing the gap in land control and ownership structures. "Reviewing permits has to be integrated with the framework of agricultural reform, which is one of the president's priority agendas," she added.

Ideally, the moratorium should stay in place for 25 years since it takes a long time to restore the environment, Walhi said in a statement.

Massive deforestation and land clearing in Sumatra for oil palm plantations has been targeted for years by various campaigners against deforestation. It has been blamed for climate change and the loss of natural habitat for wildlife including the iconic Sumatran tiger, orangutan and elephant.

Greenpeace said that although the presidential instruction was a step forward, its temporary duration and non-penal nature would leave millions of hectares of forest unprotected because of inconsistencies and loopholes.

"Three years is not enough and there is no specific reason or criteria to set such a duration. It doesn't protect millions of hectares of primary forests and peatlands so the risks that they could be deforested are still there," Arie Rompas, forest campaigner for Greenpeace Southeast Asia, told Asia Focus.

The government, he said, could fix "once and for all" the sector's bad reputation in Sumatra and Kalimantan with a permanent ban on forest destruction, including within existing concessions.

"Otherwise the policy only serves as a procedural step, as it only applies to land controlled by the forestry ministry and does not cover land controlled by regional governments or forests within existing oil palm concessions," said Rompas.

The weaknesses in the moratorium, according to Greenpeace, include a lack of sanctions for non-compliance. In Indonesia's legal system, a presidential instruction is not legally binding on government departments or local officials. Moreover, it does not prevent companies from clearing forest and developing peatlands within existing concessions.

In its report last month on the state of deforestation in Indonesia, Greenpeace said 25 palm oil groups had cleared 130,000 hectares of rainforest since the end of 2015.

Some of the world's largest fast-moving consumer goods brands, it said, have allegedly contributed to destroying rainforests almost twice the size of Singapore in less than three years.

The report also alleged that Wilmar International, a global palm oil trader, had bought palm oil from 18 out of the 25 groups, despite its December 2013 pledge not to do business with any suppliers involved in deforestation, peatland destruction and exploitation.

Responding to the report, Wilmar said in a statement last Tuesday that it was "disappointed with the allegations made by Greenpeace that discredit the genuine efforts and progress" that the company and the palm industry made to promote the sustainable development of palm oil.

It also said that of the 25 suppliers named by Greenpeace, Wilmar had done business with 13 but not 18 as claimed.

The Indonesian Palm Oil Association (Gapki) said it was reviewing its policies and would coordinate with all stakeholders to seek clarification on the new orders to avoid any possible misinterpretation.

Earlier this year, the association complained it was not given a chance to have input into the drafting of the policy.

Data from Gapki showed that palm oil exports in the first quarter of 2018 were down 2% to 7.84 million tonnes from 8.02 million tonnes in the same period in 2017.

But exports to traditional markets such as the EU, China and United States showed a rise from February to March this year, at 38%, 16% and 11% respectively. Africa also increased its palm oil imports from Indonesia by 38% in the same period.

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