InfoSAWIT, JAKARTA - The launch of the Danantara sovereign fund by President Prabowo Subianto on February 24, 2025, marks a significant commitment from the government to encourage investment in the food and renewable energy sectors. With assets valued at US$900 billion, the palm oil industry is one of the sectors aligned with this program, given its strategic role as a primary source of food and biofuel raw materials.
However, the substantial investment needed for the development of resource-based industries requires the availability of extensive land. Unfortunately, plans for land expansion often face classic obstacles in the form of deforestation allegations that frequently hinder investment. Therefore, the government and Danantara must promptly address this issue as a key factor in maintaining a balance between environmental sustainability and the economic viability of the palm oil industry.
Indonesia has a land area of 188 million hectares, divided into two main categories: forest areas and non-forest areas (other land uses). According to data from the Ministry of Forestry, approximately 120.3 million hectares, or 64 percent of Indonesia's total land area, is designated as forest, while the remainder is available for other developments.
A fundamental issue in the deforestation debate is the differing perceptions regarding the definitions of forest and deforestation. In Indonesia, a forest is defined as land with a minimum area of 0.25 hectares and a tree canopy cover of at least 30 percent. Meanwhile, the Food and Agriculture Organization (FAO) defines a forest as land greater than 0.5 hectares with trees taller than 5 meters and a canopy cover of more than 10 percent.
FAO also defines deforestation as the conversion of forested areas to non-forest use or a reduction in canopy cover below 10 percent. However, in Indonesia, deforestation is defined as the loss of forest in specific classes designated by the government. Additionally, FAO introduces the term "forest degradation," referring to the transformation of primary forests or naturally regenerating forests into plantations or other wooded land.
As global concerns about climate change and carbon emissions rise, the world's perception of deforestation has drastically changed. The term "forest degradation" is now considered irrelevant as it is automatically equated with deforestation. Consequently, when Minister of Forestry Raja Juli Antoni announced that the government had identified 20 million hectares of forest land, including degraded forests, for food and energy purposes, the policy sparked controversy.
Currently, the prevailing understanding among global environmental movements is that forests must be preserved and protected without exception. As a result, deforestation, defined solely as the loss of canopy cover and forested land, is viewed as a completely prohibited action, disregarding development goals or the legal status of the land.
To address this disagreement, the government can take three priority steps: First, redefine forests based on ecological functions and legality. The government should align the legal status and ecological profile of forests based on scientific studies, particularly concerning ecological functions and environmental services. Protection and conservation of forests should be established through High Conservation Value (HCV) and High Carbon Stock (HCS) assessments. Thus, forest areas with high conservation and carbon stock values must remain protected, while production forests can be allocated for plantation and agricultural development.
Second, differentiate between deforestation and the conversion of production land. Deforestation should be defined as the change or conversion of forest areas designated as protected or conservation areas based on HCV and HCS studies. Changes or losses in forest cover in production areas should not be considered deforestation without in-depth scientific studies.
Third, introduce the concept of "Legal Deforestation." The government needs to introduce the concept of "legal deforestation" for specific areas designated as investment land. This aims to address the frequent allegations of deforestation concerning three main aspects: land cover status, production forests, and areas with low carbon stock (non-HCS) and low conservation value (non-HCV). However, this concept must be based on national studies regarding HCV, HCS, and primary forests as a basis for re-establishing forest land use in Indonesia.
Resolving the differences in perceptions regarding forests and deforestation is crucial to ensuring sustainable investment in the palm oil sector. If the government successfully implements a science-based approach to forest management and deforestation, a balance between economic growth, energy resilience, and environmental conservation can be achieved. Thus, Indonesia can continue to lead in the global palm oil industry without compromising its commitment to sustainable development. (*)
Author: Edi Suhardi/Sustainability Analyst
Disclaimer: This article represents the author's personal opinion and is entirely the author's responsibility, with no connection to InfoSAWIT.
