JAKARTA — A year after the Indonesian government imposed a ban on issuing new licenses for oil palm plantations, the leading certification body for sustainable sourcing of the crop has criticized the policy as essentially ineffective.
The licensing moratorium, signed by President Joko Widodo in September last year and expected to remain in force for a maximum of three years, has resulted in the withholding of permits to clear a combined 16,000 square kilometers (6,200 square miles) of forest areas for plantations. The moratorium also calls for government ministries and regional governments to conduct a massive review of existing licenses, since many are known to have been issued in violation of procedures.
But whether the freeze has had a net positive impact on sustainability in the world’s biggest producer of palm oil is difficult to say, according to a representative of the Roundtable on Sustainable Palm Oil. Tiur Rumondang, the Indonesian country director for the RSPO, said she had identified at least three weaknesses in the policy, making it “hard for us to quantify whether this moratorium truly has a meaning in numbers for RSPO or not.”
“If the moratorium is considered as a tool to cut off mistakes in the management and operation of the palm oil industry, then frankly speaking this tool is blunt,” Tiur said at an event in Jakarta hosted by Sawit Watch, an NGO that monitors the palm oil industry.
Lack of Data and Transparency
One of the most obvious flaws in the policy is the fact that there’s no definitive baseline data from which to gauge the effectiveness of the moratorium in achieving its goals, according to Tiur.
“If the goal is improvement, it means the problems [in the palm oil industry] have been reduced,” she said. “If the goal is eliminating illegal permits, it means sanctions have been given. If the goal is productivity, it means the productivity is increased. That’s very clear.”
She also cited the lack of a monitoring mechanism to ensure the policy is implemented properly, with no new permits issued during the moratorium period. “There’s no structured mechanism on who is [in charge of] monitoring,” Tiur said. Instead, NGOs have taken it on themselves to act as watchdogs, she pointed out.
“But this is a government policy whose progress has to be measured,” Tiur said. “I personally don’t know who’s doing [the monitoring].”
Even if there were a clearly designated government institution to monitor progress, it would still be difficult to quantify any progress, or lack thereof, due to the secrecy that surrounds the Indonesian palm oil industry, she said.
“Even the data on the size of palm oil [concessions for which] permits have been issued has never been disclosed by the government,” Tiur said.
The government recently said it had identified 163,800 square kilometers (63,200 square miles) of oil palm plantations throughout Indonesia after consolidating data from various government agencies. Of this total area, nearly a fifth, or about 31,000 square kilometers (12,000 square miles) comprise illegal plantations that lack forest conversion permits.
Crucially, however, there’s no officially published data on how many plantations have obtained agricultural permits, known locally as HGU, which is the final license required by a company in order to develop a plantation.
“The question is, how many HGU permits have been issued?” Tiur said. “Now the moratorium has to be enforced with the goal to see if the permits issued are legal or not. But how can we do that if the data on HGU permits has never been disclosed, both the size and the location?”
The government has insisted on keeping the HGU data, which include plantation maps and boundaries, out of the public’s reach, citing reasons ranging from corporate secrecy to anti-competitive practices to national security. The RSPO, however, requires its members to publish plantation maps on its website.
“We don’t need to know the owners [of the plantations],” Tiur said. “But when the data is disclosed [to the public], appropriate sanctions can be given [to companies violating the regulations]. But if these things are never disclosed, then we will never be able to measure the effectiveness of this policy.”
Another weakness she identified in the licensing moratorium is the lack of sanctions for any violations found during the review of existing licenses.
“If during this process we find violations, what are the sanctions?” Tiur said. “If there’s no sanction, then let’s make mistakes over and over again. That’s the message.” If these weaknesses aren’t addressed, Tiur said, other countries might conclude that the moratorium is a toothless policy.
“We have to see that this government policy indeed has teeth and is beneficial,” Tiur said. “But if this policy doesn’t work, then I’m worried that people from other countries will see that not even the government policy is serious [in improving the palm oil industry]. Meanwhile, we want to push our palm oil to be considered suitable for the global market, to be considered sustainable.”
The palm oil industry in Indonesia has long been associated with environmental, labor rights and human rights violations, primarily the destruction of vast swaths of tropical rainforest to make way for plantations. To date, there is no credible and accountable system to prevent violations and corruption in the industry.
Two official audits by different government agencies have found massive compliance problems. The latest one, conducted by the government’s audit agency, known as the BPK, found that 81 percent of oil palm plantations in Indonesia are operating in violation of numerous regulations.
These problems have spawned a consumer backlash against palm oil, which in turn have prompted governments to also crack down. Earlier this year, the European Commission approved a measure to phase out palm oil-based fuels from the European biofuel market by 2030, citing concerns that the production of the crop contributes to global carbon emissions and thus exacerbates climate change.
The Indonesian government has sought to address those concerns by developing its own certification scheme, called Indonesian Sustainable Palm Oil (ISPO). Dedi Junaedi, the director of plantation management at the Ministry of Agriculture, said his office was focusing on pushing companies to comply with the ISPO standard as part of the moratorium.
“We are trying to strengthen institutional [capacity] and we are focused on speeding up the certification of ISPO,” he said.
But most industry observers rate the ISPO as inferior to the RSPO as far as sustainability standards are concerned, noting that it essentially certifies that a company is abiding by Indonesian law, with little consideration for protection of human rights and community livelihoods. The European Union, Indonesia’s second-largest palm oil export market after India, has said the ISPO isn’t strong enough to be acknowledged by the EU as it’s not considered a global standard for sustainable palm oil, while the RSPO is more broadly recognized.
A 2017 report rated the RSPO the best of the existing certification schemes for biofuels and edible oils, while also emphasizing that there was room to improve. In 2018, the RSPO for the first time adopted new standards prohibiting its member companies from clearing any type of forest for palm plantations.
Teguh Surya, the executive director of the environmental NGO Yayasan Madani Berkelanjutan, said that if Indonesia wanted to win greater acceptance for its palm oil in the global market, then the government had to change its mindset about how the local industry operates.
“The global mindset on agricultural products has changed with a demand for green [products],” he said. “But Indonesia still adopts an old-school mindset. We are still proud of being the biggest exporter, but that’s not current.”
He cited the example of Malaysia, the world’s No. 2 producer of palm oil, which has invested heavily in technologies and practices to boost productivity and improve sustainability.
“What’s current is Malaysia with its sustainable palm oil,” Teguh said. “The moratorium policy should have as its goal Indonesia becoming the largest sustainable palm oil producer in the world.”