InfoSAWIT, JAKARTA - As the world's largest producer of palm oil, Indonesia plays a strategic role in the global supply chain. The industry has become a backbone of the national economy, contributing approximately 3.5% to GDP and providing livelihoods for over 18 million people. However, significant challenges loom, particularly regarding evolving global regulations, including the European Union Deforestation Regulation (EUDR), which is set to take effect in 2026.
The EUDR includes provisions on traceability, a ban on developing plantations in deforested areas, and compliance with due diligence. Initially scheduled for 2025, the policy has been postponed to 2026.
Despite this delay, Indonesian Business Council (IBC) CEO Sofyan Djalil emphasized that Indonesia should not remain idle. Instead, this presents an opportunity for the national palm oil industry to further strengthen the role of smallholders, who manage 40% of palm oil plantations in Indonesia. Smallholders hold the key to increasing productivity but are also the most affected by EUDR regulations. Therefore, collaborative efforts from all stakeholders are needed to ensure they are prepared in terms of regulations, technology, and financial support.
In global debates, palm oil is often blamed for deforestation. However, deforestation in Indonesia occurred long before the palm oil industry developed. In the 1970s, forest concession policies for various purposes were the primary drivers of massive deforestation. Conversely, the palm oil industry now contributes to restoring degraded land by converting it into productive areas.
Thus, the implementation of the EUDR should not impose unfair standards on palm oil-producing countries like Indonesia. If this policy is applied with an unbalanced approach, it risks creating regulatory imperialism that could be detrimental. A mutual understanding and more cooperative policies between the European Commission and Indonesia are necessary to keep palm oil products competitive in the global market, especially in the European Union.
This strategic issue was a focal point during the Collaborative Dialogue held as part of the Indonesia Economic Summit (IES) 2025, attended by InfoSAWIT on February 18, 2025. The event was organized in collaboration with the Global Alliance for a Sustainable Planet (GASP), the Indonesian Business Council (IBC), and the Indonesia Palm Oil Strategic Studies (IPOSS). The roundtable brought together 60 key figures from both domestic and international sectors, including government representatives, business leaders, and strategic partners, to discuss the future of sustainable palm oil in Indonesia.
With various strategies and commitments established during this dialogue, Indonesia has a significant opportunity to lead the implementation of a sustainable palm oil industry. Aligning national economic interests with environmental sustainability is key to the industry's longevity. If successful, Indonesia will not only maintain its position as a global market leader but also as a responsible nation in balancing economic growth with environmental sustainability. (T2)
