The Urgency of Extending Palm Oil Moratorium to Accelerate Indonesia’s Palm Oil Governance Reform

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It is undeniable that the palm oil industry plays a strategic role in the national economy. In 2020, Statistics Indonesia recorded that volume of palm oil product exported reached 34 million tonnes. In addition, the industry also provides jobs and livelihoods for millions of smallholder families. However, it needs to be understood that the various challenges faced by the industry is, among others, low levels of prosperity among smallholders, the numerous underdeveloped villages around plantations, the gap between central and local incomes, low tax payment, to ecological problems and the rampant social conflicts, which in turn reduces palm oil product competitiveness in global markets.

One of the currently available instruments to untangle the problems of palm oil governance is Presidential Instruction No. 8 of 2018 on Moratorium on and Evaluation of the Licensing of Palm Oil Plantations and Productivity Increases for Palm Oil Plantations. Nevertheless, this moratorium ends on September 2021. The policy is conceptually strategic, but not yet optimally implemented and therefore the policy needs to be extended to resolve and accelerate Indonesia’s palm oil governance reform for the future.

In response to this condition, the civil society coalition publishes this policy paper to explain the strategic opportunities that Indonesia will gain from extending the palm oil moratorium, as well as spotlighting the challenges faced if the moratorium is not extended and implementation of the Job Creation Law in the palm oil sector, as well as tactical recommendations for the government to optimize this policy.

Key Points:

  1. Extending the Presidential Instruction No.8 year 2019 about the Postponement and Palm Oil Permit Evaluation and Increasing Productivity of Palm Oil known as palm oil moratorium is a logical move for the government. This will create positive impact to global market support, trigger land productivity, resolve land overlaps, and contribute to the achievement of climate commitments.

  1. Not extending the palm oil moratorium will delay measures for improving palm oil governance that the government have initiated thus far. Government Regulations issued since the Job Creation Law was passed still cannot accommodate the drive to fully improve palm oil governance without first completing the palm oil moratorium mandate.

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