InfoSAWIT, JAKARTA — The Indonesian government has officially issued Presidential Regulation (Perpres) No. 16 of 2025 on the Indonesian Sustainable Palm Oil (ISPO) Certification System. While the regulation appears to champion sustainability, critics warn that it may instead pose new challenges to food and energy security, especially for smallholders.
President Prabowo’s administration has made national food and energy security a cornerstone of its development agenda. However, this new regulation seems at odds with that vision. This is the second arguably counterproductive move following increased export levy rates—set at 10%—despite the government's push for palm oil downstreaming. Smallholders, who cultivate around 40% of the country's oil palm plantations, are now expected to subsidize bioenergy initiatives while they themselves struggle to make ends meet.
Meanwhile, foreign companies controlling nearly 60% of Indonesia’s oil palm estates are subject to taxes and levies but are not obliged to share profits with the state or communities as mandated by Article 33 of the 1945 Constitution. The new Perpres cites only Article 4, focusing on presidential authority, while overlooking constitutional mandates on natural resources benefiting the people.
The ISPO certification is now mandatory for all stakeholders, including small-scale farmers, with costs to be borne independently. Critics argue this is unfair. “If it’s mandatory, shouldn’t the government fund it?” questioned one observer. Legal processes in Indonesia often involve unofficial costs, and critics fear ISPO could become yet another bureaucratic burden.
The government’s replanting program, initiated through the Palm Oil Fund Management Agency (BPDPKS), has also faced stagnation due to unresolved land status issues. There are concerns that land ownership transfers have disproportionately favored business elites at the expense of local communities.
Perpres No. 16/2025 divides the palm oil industry into three sectors: plantations, downstream processing, and bioenergy. Ironically, smallholders in the first sector are most burdened, especially due to overlapping land claims with forest areas—a long-standing bureaucratic dilemma involving local governments, the Forestry Ministry, and the Land Agency (BPN).
National oil palm productivity remains just 25–30% of its potential. With improved governance and focus on yield, Indonesia could significantly increase output—securing cooking oil supply, boosting bioenergy, and driving economic gains. Yet instead of boosting productivity, critics claim the government is creating layers of regulation that stifle grassroots development.
Particularly controversial is Article 5, which introduces strict penalties for non-compliance, including fines and business license revocation. This raises concerns over potential corruption and abuse of authority.
Why is ISPO mandatory only for palm oil? What about other key commodities like rubber, cocoa, tea, and coffee? “Is it because palm oil is seen as more lucrative?” critics ask. If the government is serious about sustainable agriculture, real incentives—such as subsidized fertilizers, land access, and legal protections—should be prioritized.
Indonesia has 190 million hectares of land, of which over 90 million hectares are non-forest areas. With such vast resources, the government is urged to regulate more wisely, ensuring policies do not overburden farmers or hinder the nation’s energy and food independence.
In conclusion, if the government truly seeks a sustainable palm oil sector, it must start with improving productivity and land governance. Certification should be encouraged, not imposed. Otherwise, the ISPO regulation could risk becoming another hurdle that distances palm oil development from the very people it should benefit. (*)
By Memet Hakim – Plantation Analyst, Lecturer at the Faculty of Agriculture, Padjadjaran University
Disclaimer: This article reflects the author’s personal views and does not represent the stance of InfoSAWIT.
