InfoSAWIT, JAKARTA – The global supply and consumption of palm oil products and their derivatives as food, bioenergy, and healthy, efficient care products continue to grow each year. Currently, with an annual production of around 100 million tons, palm oil has become the most strategic vegetable oil commodity, contributing over 40 percent of the global vegetable oil needs.
As the largest palm oil producer in the world, with over 16.8 million hectares of palm oil plantations contributing more than 55 percent of the global palm oil supply, Indonesia plays a strategic role in trade and meeting the global vegetable oil sufficiency.
In line with the increasing global market demand and the rising average global palm oil prices, which have surged to around US$ 1,100 per ton, significantly up from US$ 600 in 2015.
The growing palm oil market globally has a positive impact on Indonesia. According to data from the Indonesian Ministry of Finance, the state revenue from the palm oil business in 2024 reached US$ 88.1 million, equivalent to around Rp 660 trillion, and continues to increase each year.
Since the 1980s, the palm oil plantation business in Indonesia has rapidly developed, driven by private companies alongside state-owned enterprises and palm oil farmers. The cooperative relationship between plantation companies and palm oil farmers has been established through various partnership models that have helped improve the economy of communities in various regions.
However, the palm oil plantation business continues to face serious challenges and obstacles, particularly related to land use permit policies and business certainty that often hinder the realization of sustainable palm oil growth.
The Need for Legal Certainty in Indonesia's Palm Oil Business
The President's policy to regulate palm oil plantation businesses through the regulation of forest areas can be seen as a step to prevent future legal uncertainties for palm oil development. Many of the issues faced by this sector stem from legal uncertainties related to the legality of palm oil plantation land.
Based on Presidential Regulation No. 5 of 2025, the Indonesian government has taken over illegal palm oil plantation land located in forest areas. Through the Forest Area Regulation Task Force (Satgas PKH), the government is working to regulate palm oil plantations in forest areas through land confiscation by the Attorney General's Office of the Republic of Indonesia.
Furthermore, the government has confiscated palm oil plantations and is collaborating with the Ministry of State-Owned Enterprises (BUMN) to manage them through a state-owned enterprise called PT. Agrinas Palma Nusantara (Agrinas). According to data from the Attorney General's Office of the Republic of Indonesia in 2025, the PKH Task Force has successfully confiscated palm oil plantation land covering 1.1 million hectares.
Certainly, the management of palm oil plantation land by Agrinas, a state-owned enterprise, has received various reactions from the public, both positive and negative. This is because Agrinas initially operated in contracting and consulting, but has now transformed into a palm oil plantation manager with millions of hectares of land.
However, Agrinas' presence can be a solution for domestic palm oil plantation business players, considering the various legal uncertainties that have been very disruptive. With clear regulations from the government, legal clarity for the palm oil business is now improving.
Agrinas: A Premier Solution for Sustainable Palm Oil
With Agrinas serving as a symbol of government intervention in the management of palm oil plantations in Indonesia, it is expected to provide solutions to several crucial issues that have long plagued and hindered the development of the palm oil business.
From a sustainability perspective, as a government-owned enterprise, Agrinas offers five important benefits and breakthroughs in the effort to realize sustainable palm oil in Indonesia.
First, Agrinas acts as a catalyst for the legalization of previously problematic land through the government's clear land legality policy. The status of land that overlaps administratively with forest areas must be legally transformed into non-forest areas and removed from forest area status to become cultivation areas. Therefore, the government needs to promptly issue regulations for the legalization of palm oil plantation areas and quickly reorganize land use planning and national forest area maps.
Second, with Agrinas' control over all previously problematic palm oil plantation lands, the government is obliged to legalize the status of these lands, which have been associated with forest encroachment or deforestation. The government must decisively address all allegations regarding deforestation issues by demonstrating that all uncertainties regarding the status of palm oil plantation lands have been resolved and that palm oil plantations are not linked to forest encroachment or deforestation.
Third, the changes resulting from the government's takeover of land and the management of palm oil plantations by Agrinas create a momentum for achieving comprehensive sustainable palm oil in Indonesia. Previously, efforts to achieve 100 percent sustainable palm oil were often hindered by overlapping administrative land status with forest areas. It is hoped that with government management through Agrinas, followed by the reorganization of land use maps and national forest areas, the commitment and certification of all Indonesian palm oil plantations can be realized.
Fourth, it is expected that with a new rational land use map and forest area, the development of sustainable palm oil plantations can continue through the establishment of new plantations for energy estates or food estates in areas that are truly ecological and not forested. In this regard, Agrinas will act as the executor of development in accordance with sustainability principles and compliance with applicable regulations.
Finally, Agrinas can serve as a model for sustainable palm oil plantations that comply with legal standards in land management and sustainable plantation practices to meet global trade and market standards. Sustainable cultivation aspects can be realized by involving experts in palm oil cultivation with specific expertise. This includes the use of superior seeds, integrated pest management, optimal fertilization practices, and harvesting methods through the Early Harvest Programme (EHP).
This can be achieved through partnerships and collaborations with private plantations that have competent capabilities in both agronomic and sustainability aspects to grow and develop together effectively. Additionally, it is crucial for Agrinas to quickly embrace and partner with all palm oil business players in Indonesia to maintain national palm oil production growth and enhance palm oil's contribution to national development.
The success of Agrinas will mark a significant achievement for the government under President Prabowo Subianto's leadership in two important areas: first, resolving land use issues and the complex uncertainties of area status with comprehensive policies; and second, maintaining the palm oil industry as a strategic industry for sustainable growth. (*)
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.
