InfoSAWIT, JAKARTA — The government is reinforcing its commitment to promoting sustainability in the national palm oil industry by expanding the scope of the Indonesian Sustainable Palm Oil (ISPO) certification from upstream to downstream sectors. This initiative is underscored by the issuance of Presidential Regulation (Perpres) No. 16 of 2025, which replaces the previous Perpres No. 44 of 2020.
The new regulation not only broadens the ISPO certification to include the processing and bioenergy sectors but also introduces institutional restructuring and new financing schemes to support ISPO implementation, including for smallholder farmers.
“ISPO is not just a label; it is a comprehensive system that ensures palm oil operations are conducted sustainably from economic, socio-cultural, and environmental perspectives, in compliance with regulations,” stated Ratna Sariati, Head of the Substantive Group for Implementation and Quality Control of Plantation Products at the Ministry of Agriculture, during a discussion at the Agricultural Journalists Forum (Forwatan) attended by InfoSAWIT in Jakarta on June 4, 2025.
Ratna explained that with this expanded scope, ISPO is now a cross-ministerial responsibility. The Ministry of Agriculture will continue to oversee the upstream sector, while the Ministry of Industry will regulate the downstream sector, and the Ministry of Energy and Mineral Resources will be responsible for palm-based bioenergy.
In terms of financing, ISPO certification can now be facilitated through various sources such as the State Budget (APBN), Regional Budget (APBD), and the Palm Oil Plantation Fund Management Agency (BPDPKS). The government has also begun to impose administrative sanctions on businesses that fail to comply with ISPO regulations, ranging from warnings and fines to temporary suspensions of business activities.
As of February 2025, a total of 1,157 businesses have been ISPO certified, covering 6.2 million hectares of palm oil plantations. Of this total, approximately 84% is owned by private companies, 9% by state-owned enterprises, and 7% by smallholder farmers. In terms of area, Indonesia now surpasses Malaysia in certified sustainable palm oil.
To strengthen the legal and technical framework for implementation, the Ministry of Agriculture is currently drafting updates to Ministerial Regulation No. 38 of 2020, which serves as a derivative regulation of the newly issued Perpres 16/2025.
Meanwhile, the Ministry of Industry is preparing an ISPO certification scheme for downstream palm oil products. “The terminology for downstream ISPO remains flexible, but the main principle is to ensure that processed products reaching consumers come from sustainable sources,” said Lila Harsyah Bakhtiar, Director of Chemical Engineering, Oleochemicals, and Animal Feed at the Ministry of Industry.
According to Lila, Indonesia currently exports only about 10% of Crude Palm Oil (CPO) in its raw form, while the remainder consists of processed products. Therefore, maintaining product traceability is crucial to meet the increasingly selective global market demands regarding sustainability.
She explained that downstream ISPO certification will allow producers to include the ISPO logo on product packaging, similar to halal certification, as a guarantee to consumers. The certification focus will be directed towards downstream products with high volume and market potential among the 190 types of palm oil derivative products available.
The downstream certification scheme will adhere to a mass balance system—mixing certified and non-certified raw materials with strict record-keeping. Lila noted that this system will adopt norms from international standards such as RSPO (Roundtable on Sustainable Palm Oil), ISCC (International Sustainability and Carbon Certification), and MSPO (Malaysian Sustainable Palm Oil).
Unlike the National Standard of Indonesia (SNI), which assesses end products, downstream ISPO will focus on the production process. However, the ISPO logo can still be included on product packaging. The main principles include compliance with regulations, a robust documentation system, and business practices aligned with the United Nations Sustainable Development Goals (SDGs).
Lila added that the technical regulation draft for downstream ISPO will be published in June 2025 to gather public input through consultations. This regulation will refer to Ministerial Regulation No. 45 of 2020.
“With an inclusive and collaborative approach, we hope that downstream ISPO certification can be effectively implemented without becoming a burden for businesses,” she concluded.
This initiative underscores Indonesia's commitment to solidifying its position as a global palm oil producer that excels not only in volume but also leads in sustainability throughout the palm oil supply chain from upstream to downstream. (T2)
