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“Indonesia Sustainable Palm Oil” and the Legality of People’s Palm Oil

  • Date:
    27 Jun 2020
  • Author:

The development of sustainable oil palm plantations in Indonesia is now entering a new phase, along with the issuance of Presidential Regulation (Perpres) No. 44/2020 concerning ISPO (Indonesia Sustainable Palm Oil). Apart from various criticisms from NGOs regarding the weak commitment to the issue of human rights and deforestation, this “New ISPO” is a reaffirmation of the Indonesian government’s determination to realize sustainable oil palm plantation development. Currently, the government is working hard to finalize the regulations for implementing the Presidential Decree, to ensure that the “New ISPO” will run immediately.


One thing that has become a hot topic of discussion in palm oil circles is the scope of this “New ISPO”, which is to make it mandatory for all plantation business actors, both companies and planters. Although, for smallholders, the implementation is given a grace period of five years, up until 2025. The question that then arises is; will independent smallholders be able to meet ISPO prerequisites with the various challenges that they have?


The readiness of independent smallholders


Independent oil palm plantations are faced with complex land legality issues that are not easy to resolve. About 36 percent of the total area of ​​independent oil palm plantations operates illegally, because it is located in forest areas. Meanwhile, about 64 percent of other plantations outside the forest area are also not fully legal as they are not guaranteed to comply with the prevailing spatial planning. It is also not guaranteed that the gardens are free from conflict and overlap with other uses (Auriga, 2019; Bakhtiar et al., 2019).


On average, these plantations are also not supported by adequate land ownership documents, such as Freehold Certificate (SHM) (Jelsma et al., 2017). Starting from this, we can get an idea that the level of readiness of independent oil palm smallholders to be involved in the ISPO certification system is very low. Imagining that ISPO will apply to all oil palm plantations, including independent oil palm plantations with a total area of ​​approximately 1.9 million hectares (AURIGA, 2019), would be very difficult unless accompanied by a structured, systematic, and massive structuring program for smallholders, especially independent oil palm smallholders.


Momentum for structuring land legality


The government’s determination to encourage community land management has actually escalated quite significantly in recent years. Through the Agrarian Reform (RA) and Social Forestry (PS) programs, the government has tried to build the backbone of a community land management framework, both inside and outside forest areas.


Unfortunately, so far these efforts have not yielded sufficient results. Presidential Decree 88 of 2017 concerning Settlement of Land Use in Forest Areas and Permen LHK 83 of 2016 concerning Social Forestry, in fact neither can provide guarantees for the settlement of independent palm oil in forest areas.


Presidential Instruction 8 of 2018 concerning Postponement and Evaluation of Oil Palm Plantation Licensing and Increasing Productivity of Oil Palm Plantations and INPRES 6 of 2019 concerning the National Action Plan for Sustainable Palm Oil has also not shown results for solving this problem.


All ministries develop an interpretation that Perpres 88/2017 is not designed for smallholder oil palm plantations in forest areas. As stated in the regulation, the forms of land use to be resolved are settlements, land for public facilities or social facilities, rice fields, and mixed gardens.


Meanwhile, the settlement of independent oil palm plantations through Social Forestry also does not promise the smallholders’ business sustainability. The time limit of 12 years from the planting year (article 55 Permen LHK 83/2016) indicates that independent smallholders will soon lose their oil palm assets, even during peak productivity times.


Now the ISPO policy is back with a new format and spirit in terms of sustainable oil palm plantation management, in which the arrangement of land legality is one of the important principles that must be fulfilled. The presence of ISPO should provide a new hope for the settlement of the legality of the independent oil palm plantations that have been stagnant so far. From all these problems, independent oil palm plantations outside the forest area must start the greatest opportunity to structure land legality.


Nationally, these plantations cover 1.2 million hectares, roughly 70 percent of the total area of ​​independent oil palm plantations in Indonesia (AURIGA, 2019). Most of these independent oil palm plantations are generally not supported by sufficient proof of land ownership, in this case, a Certificate of Ownership (SHM). Evidence of plantation ownership is only in the form of a land certificate (SKT), not to mention the legality of the business, which must be proven with a Cultivation Registration Certificate (STD-B).


Less than 1 percent of these independent plantations have been registered by the district government, as mandated by the Ministry of Agriculture (Permentan) 98/2013 Jo. Permentan 21/2017 on Guidelines for Plantation Business Licensing. From this situation, implementing PTSL (Complete Systematic Land Registration) and mapping and registration of independent smallholders outside forest areas can be the first steps for implementing “New ISPO” for independent oil palm plantations.


Thus, the implementation of “New ISPO” is expected to be a momentum for starting a new era of legality arrangement for independent oil palm plantations, from sporadic to systematic; from unconsolidated to consolidated. Such efforts need to be started immediately and mainstreamed within the five-year grace period provided for the planters.


Harmonization of rules and regulations


PERPRES 44/2020 should be used as momentum for the arrangement of independent palm plantations, focusing on land legality. Without that, the ISPO certification system will only be a set of laws and regulations that are not implemented and are not a solution in the arrangement of independent oil palm plantations in Indonesia. It can add to the chaos of policies and regulations, just like the previous regulations. To avoid such chaos, harmonization and policy reforms need to be the mainstream in the roadmap for structuring the legality of the land for independent oil palm plantations.


The following are some components that are deemed urgent to be implemented:

  1. ISPO principles and criteria related to land legality must refer to current conditions and facts on the ground.

Therefore, the ISPO Criteria and Indicators must provide space for land legality requirements in the form of certificates such as SKT or girik / proof of land sale / proof of land lease / other traditional land documents that existing social institutions in the community recognize.

Also, the agreement on social forestry permits as a legality requirement for oil palm plantations that are included in the social forestry scheme.

  1. The government needs to accelerate data collection, mapping, and issuance of STD-B for independent oil palm plantations

With data and maps, the government can design programs to improve land legality, issue STD-B, and resolve the status of independent land / oil palm plantations in forest areas.

Therefore, BAPPENAS needs to design programs and funding related to data collection, mapping, issuance of STD-B, and enhancing the legality of independent oil palm plantations during 2021-2025, as an effort towards an ISPO certification system for independent oil palm plantations.

  1. The government needs to harmonize regulations related to defining the maximum limit of independent oil palm plantations, legality requirements, and settlement of land status.

This policy is important so that regulatory overlaps do not occur, so that there is legal certainty. In addition, there are about 713 thousand hectares of independent oil palm plantations in forest areas, whose land status must be resolved immediately. (Irfan Bakhtiar, Director of SPOS Indonesia – KEHATI Foundation)


This article has been published on kompas.com