Palm Oil Industry Indonesia: Five-Year Moratorium on New Concessions
The government of Indonesia plans to issue a five-year moratorium on new palm oil plantation concessions through a presidential instruction. For Indonesian President Joko Widodo it is one of the top priorities to safeguard a healthy and sustainable environment, especially after international criticism on Indonesia's weak environmental policies heightened due to the flaring up of devastating forest fires on Kalimantan and Sumatra as well as the spread of toxic haze to other parts of Southeast Asia between June and October 2015.
Indonesia's is the world's largest producer and exporter of crude palm oil (CPO) and therefore the industry is a key foreign exchange earner and provides employment to millions of Indonesians. Widodo earlier emphasized that he does not want to weaken Indonesia's palm oil output by curtailing additional plantations. Instead, he wants to boost productivity of existing plantations by using more efficient farming techniques and seeds as well as the replanting of new trees (rejuvenation).
The soon-to-be-issued five-year moratorium on new palm oil concessions forms one in a series of moratoriums. In May 2011 a two-year moratorium on the issuance of new permits to clear rain forests and peat lands was issued. This moratorium has been extended twice and is currently still in effect. Earlier this year Widodo said the government may also implement a moratorium on new concessions in the mining sector with the aim to safeguard Indonesia's rich biodiversity.
Indonesian Chief Economics Minister Darmin Nasution added that the government will make use of its "Single Map Policy", a single reference map that harmonizes all maps from different state agencies to a scale of 1:50,000 to prevent overlapping land concessions. By taking this map as a point of reference it can become known whether new plantations are added over the next five years.
A side effect of the five-year moratorium is that existing palm oil plantations become more valuable. Several Indonesian palm oil plantation owners have already contacted Indonesia Investments to seek buyers for their oil palm plantations.
Indonesia & Environment
A recent study published in Scientific Reports says the forest fires on the Indonesian islands of Sumatra and Kalimantan that occurred in late-2015 released approximately 11.3 million tons of carbon each day (a figure that exceeds the 8.9 million tons of daily carbon emissions in the European Union). These forest fires in Indonesia are among the worst natural disasters ever recorded. More than 100,000 man-made forest fires destroyed 2.6 million hectares of land within a five-month period. According to the World Bank, it cost Indonesia losses of IDR 221 trillion (approx. USD $16 billion or 1.9 percent of the country's gross domestic product).
Traditionally, Indonesian farmers use slash and burn practices to clear forest for the expansion of palm oil and pulp & paper plantations. Although such practices are illegal, Indonesia's weak law enforcement facilities such destruction of the environment.
Indonesia's Palm Oil Production and Export Statistics:
(in USD billion)
¹ indicates forecast
Sources: Indonesian Palm Oil Producers Association (Gapki) & Indonesian Ministry of Agriculture
Do you agree with Indonesia's moratorium on palm oil concessions?
Voting possible: -
- Yes, Indonesia needs to raise efforts to protect the environment (80.4%)
- No, an expanding palm oil industry creates jobs and brings forex earnings (14.3%)
- I don't know (5.4%)
Total amount of votes: 112