InfoSAWIT, JAKARTA - Recently, during the National Development Planning Meeting (Musrenbangnas) for the 2025 - 2029 National Medium-Term Development Plan (RPJMN), President Prabowo Subianto stated that palm oil is a strategic commodity and national asset that must be protected, and there should be no fear of deforestation issues when expanding palm oil plantations, as palm oil can also absorb carbon dioxide.
This statement is driven by the high demand from countries he visited for palm oil as a substitute for depleting fossil fuels. The statement has sparked both support and criticism among palm oil stakeholders.
On one hand, industry players represented by the Indonesian Palm Oil Entrepreneurs Association (GAPKI) welcomed and appreciated President Prabowo's policy direction that supports the strategic role of palm oil in national food and energy security. GAPKI hopes that the expansion of palm oil plantations will no longer face pressure and anti-deforestation campaigns from the global community.
Conversely, civil society organizations focused on social and environmental issues have voiced criticism towards the President regarding the potential social and environmental impacts of palm oil plantation expansion.
Critics from Sawit Watch highlighted that President Prabowo Subianto's statement contradicts Indonesia's commitment in the Nationally Determined Contribution (NDC) to reduce greenhouse gas emissions by 29 percent independently or 41 percent with international assistance by 2030. Sawit Watch also warned of the potential increase in community conflicts with companies if palm oil expansion is carried out, as there were still 1,088 unresolved conflicts between communities and palm oil companies as of 2022.
Both pro and contra groups certainly have strong arguments supporting their respective positions. However, both need to have a shared understanding of the global vegetable oil supply map and various economic-political opportunities, as well as social, environmental challenges, and business competition dynamics.
Data published by the Palm Oil Agribusiness Strategic Policy Institute (PAPSI) indicates that among the four main vegetable oil-producing commodities globally, palm oil plantations are still less extensive compared to sunflower, soybean, and rapeseed, with palm oil covering only 25.06 million hectares, while soybean, rapeseed, and sunflower cover 129.9 million hectares, 37.8 million hectares, and 28.4 million hectares, respectively (PAPSI, 2023).
Despite being smaller in area, palm oil is significantly more productive. According to a 2018 study by the International Union for Conservation of Nature (IUC N), palm oil is the most efficient commodity in land use compared to other global vegetable oil commodities, with each hectare of palm oil yielding 3.36 tons per year, while sunflower yields 0.78 tons per hectare per year, rapeseed 0.74 tons per hectare per year, and soybean only 0.47 tons per hectare per year.
Thus, Indonesia currently holds 65 percent of the global palm oil plantation area, totaling 16.83 million hectares, with crude palm oil (CPO) production reaching 46.82 million tons per year, divided among large private plantations producing 28.21 million tons, state-owned plantations 2.30 million tons, and smallholder plantations 16.31 million tons (BPS, 2022).
Given the production map of Indonesian palm oil in relation to the global vegetable oil market, President Prabowo Subianto's statements are indeed reasonable. The dominant position of palm oil holds strategic value that can enhance Indonesia's bargaining power in various economic diplomacy with friendly nations.
The strategic value of palm oil is further reinforced by the increasing global demand for green energy that is more environmentally friendly or renewable energy, in line with the global awareness regarding alternatives to depleting fossil fuels.
Mitigating the Impact
Discussing the policy direction of Indonesia's palm oil sector cannot be separated from the competitive landscape of global vegetable oil supply. Issues regarding the importance of social, environmental, and sustainable governance standards in Indonesia's palm oil industry have gained significant traction over the past decade.
Various sustainable business standards have increasingly highlighted palm oil as a commodity with high risks concerning social and environmental impacts. Numerous social and environmental advocacy organizations often bring cases of palm oil plantation practices in Indonesia to international forums, creating a negative campaign against the palm oil industry in Indonesia.
Palm oil industry players have consistently voiced their contributions to state revenue, economic growth, and job creation, while also refuting allegations of legal violations and the social and environmental impacts arising from plantation operations.
As a mitigation effort against legal violations, social, and environmental impacts, the Indonesian government has responded seriously to the interests of both business groups and critics of palm oil by formulating a sustainable palm oil plantation policy package (Indonesian Sustainable Palm Oil/ISPO), which is outlined in Presidential Regulation No. 44 of 2020 and technical regulations in the form of Minister of Agriculture Regulation No. 38 of 2020 regarding the implementation of sustainable palm oil certification in Indonesia.
So far, the ISPO policy package has been adhered to by palm oil industry players. According to GAPKI data in 2023, out of 725 GAPKI member companies, the majority, or 335 companies, have obtained ISPO certification.
However, some stakeholders argue that the ISPO policy still contains many substantive issues within the principles, criteria, and indicators of the ISPO certification assessment system that need to be revised and strengthened, particularly regarding the protection of social and environmental rights for affected indigenous and local communities.
Additionally, the ISPO policy needs to be reinforced to address weaknesses in licensing governance, oversight, policy changes, transparency, and law enforcement. The ISPO institution should also enhance its credibility in the international arena, ensuring that the certification receives recognition from stakeholders in the global palm oil market.
Moreover, a fundamental aspect that the Prabowo administration needs to establish moving forward is to convene all stakeholders and build a shared understanding of the sustainability policy direction for palm oil plantations. The national interests that underpin government policies to protect the palm oil industry must be genuinely developed through a process of social legitimacy and mitigation of human rights (HR) impacts and environmental protection. (*)
Author: Ahmad Zazali, SH., MH. / Chairman of the Center for Law and Conflict Resolution (PURAKA)
