InfoSAWIT, JAKARTA - The government is currently conducting a massive crackdown on palm oil plantations located within forest areas. This move is based on the Minister of Forestry's Decree No. 36 of 2025 and Presidential Regulation No. 5 of 2025, which legitimizes state institutions such as the Ministry of Defense, the Attorney General's Office, and the police to regulate forest areas controlled without forestry permits. However, behind this policy lies a significant question: will this takeover have a positive impact or will it harm the national palm oil industry?
History shows that the state has not always been a good manager in the plantation sector. For instance, the management of the confiscated PT Duta Palma plantation, covering 210,000 hectares, is now in the hands of Agrinas, which has transformed into one of the largest state-owned palm oil companies. If all plantations covering 317,000 hectares designated by the Ministry of Environment and Forestry (KLHK) are also managed by Agrinas, this company could become a national palm oil giant, potentially rivaling PTPN. But can state management be better than private management?
In 2024, Indonesia's palm oil production was recorded at only 52 million tons, down from 54 million tons in 2023. Exports also decreased to 29 million tons from 32 million tons previously. If the regulated palm oil plantations covering 317,000 hectares are not managed properly, CPO production could drop by up to 1.3 million tons. If the government aggressively takes over all 3.4 million hectares of plantations in forest areas without a solid strategy, national CPO production could plummet by up to 13.6 million tons. In other words, CPO production, initially projected to reach 48 million tons in 2025, could fall to as low as 35 million tons.
The impact of this production decline would not only affect the plantation sector but also the biodiesel industry, which the government is currently promoting. To support the B40 program, at least 15 million tons of palm oil is needed. If production decreases, the supply for biodiesel will be disrupted, exports will decline, and the country's foreign exchange earnings will be affected. In 2024, foreign exchange from palm oil exports reached US$27.76 billion, or around IDR 440 trillion. If production continues to decline, foreign exchange from palm oil in 2025 is expected to be lower. Moreover, the government's policy of increasing taxes and export levies to USD 230 per metric ton could worsen the situation.
The government should carefully consider this policy. State-owned enterprises managing natural resources, including palm oil, have repeatedly faced managerial issues, including corruption and low productivity. If this takeover is executed without a clear strategy, it is not impossible that the state could end up harming itself. This policy should not merely be an attempt to "grab the cake" without considering its impacts, which could ultimately lead to "stomach aches" for the national economy. (*)
Author: Mansuetus Darto, Palm Oil Observer
Disclaimer: This article represents the author's personal opinion and is entirely the author's responsibility, with no connection to InfoSAWIT.
