Indonesia needs to push for ISPO and RSPO harmonisation

This article has been translated by PwC Indonesia as part of our Plantation News Highlights service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily

6 April 2023

By: Tri Listiyarini

Jakarta - Indonesia needs to push for the harmonisation of Indonesian Sustainable Palm Oil (ISPO) and the Roundtable on Sustainable Palm Oil (RSPO) to accelerate the achievement of sustainable palm oil certification in the country. This is an important step in the efforts to address the negative campaigns promoted by the Global North. Currently, out of 16.38 million hectares (ha) of total national oil palm plantations, ISPO certified land has only reached 3.65 million ha while RSPO certified land realised at 2.42 million ha.

Centre for Indonesian Policy Studies (CIPS) researcher Samuel Pablo Pareira said that palm oil is the most important agricultural commodity in Indonesia. Indonesia is the world’s largest producer of palm oil with a market share of around 60%. This commodity also sustains the livelihood of 16-25 million people in the country. However, currently there is overlapping market mechanisms at the global and national scale in regulating palm oil through the RSPO and ISPO. “The existence of the two certifications is hampering each other’s targets because the high cost of certification forces companies and smallholders to choose. Consequently, the achievement of sustainable palm oil certification is not optimal. ISPO certification only reached 3.65 million ha (25%) as of November 2022 and RSPO 2.42 million ha (16.6%) as of August 2022,” said Pablo in a discussion Palm Oil: Can It Be Sustainable Wealth? as monitored from CIPS social media on Wednesday (05/04/2023).

Therefore, said Samuel Pablo, ISPO and RSPO harmonisation could be the solution, including for Indonesian palm oil to be fully sustainable through the certification of all oil palm plantations in the country. This harmonisation is also a solution to reduce transaction and information costs for business actors, especially smallholders, to increase market access and competitiveness of Indonesian palm oil producers in the global market, and to realise comprehensive product traceability from upstream (harvest of fresh fruit bunches/FFB) to downstream (cooking oil/butter). “ISPO and RSPO harmonisation is also a solution to address negative campaigns on the sustainability aspect of palm oil, especially from the Global North market, and to transform oil palm plantation practices in the long term to make them more sustainable,” said Pablo. In Indonesia, ISPO certification is mandatory, while RSPO is voluntary. 

According to Pablo, the existence of ISPO and RSPO has answered the main issues in the palm oil industry. First, the issue of overlapping land ownership data. According to Statistics Indonesia (SI), the area of oil palm plantations in 2021 reached 14.6 million ha, of which 8 million ha (55%) were owned by companies, 6 million ha (41%) by smallholders, and 600 thousand ha (4%) by state-owned or regional state-owned enterprises (BUMN/BUMD). Data from the Agriculture Ministry stated that oil palm plantation area in 2019 was 16.38 million ha. Second, the issue of agrarian conflicts and overlapping with indigenous peoples’ land, namely colonial culture that has been passed down, recognition of customary or ulayat lands and forests, and land banking by companies. Fourth, the issue of deforestation, protection of biodiversity and peatlands, related to the climate crisis. Fifth, the issue of traceability of oil palm products and ISPO’s efforts to adopt the RSPO standard in Agriculture Minister Regulation No. 38 of 2020 concerning Implementation of Certification of Indonesian Sustainable Oil Palm Plantations. 

For this reason, CIPS made several recommendations regarding the ISPO and RSPO. First, revise the Agriculture Minister Regulation No. 38 of 2020 to accommodate more independent smallholders, to be more adaptive to local conditions, and at the same time to be accepted in the global market, for example by providing flexibility for farmers to show proof of land ownership besides land ownership certificates (SHM) or by providing incentives (through funds from the Oil Palm Plantation Fund Management Agency/BPDPKS) for companies that are committed to buying FFB from farmers’ group associations or independent farmers’ cooperatives. Second, the RSPO and ISPO must undergo a new P&Cs (principles and criteria) joint study (the last was in 2015) to harmonise the two standards, which can take example from the FSC and SVLK certifications in the timber and forestry product sector. “There are still two years left for ISPO to harmonise the traceability system with the RSPO before it becomes effective in 2025,” explained Pablo.

Same goal 

Director of Processing and Marketing of Plantation Products of the Agriculture Ministry, Prayudi Syamsuri, said there is no need to put ISPO and RSPO certifications against each other in developing oil palm plantations in Indonesia. Because, in essence, the two certifications have the same intention and goal, namely to realise sustainable Indonesian palm oil. “We do not need to put the RSPO and the ISPO against each other, both can be implemented together. In the efforts to create public trust, let us choose this straight path, these two straight paths to convince the public that this certificate is proof that Indonesian palm oil is sustainable,” said Prayudi. According to him, whichever standards are used in Indonesia, fundamentally they are intended to develop sustainable palm oil together. In the process or implementation, stakeholders in the palm oil industry are welcome to provide input to ISPO initiators, in this case the government, and the RSPO palm oil industry sector association. 

Meanwhile, RSPO Global Community Outreach & Engagement Senior Manager Imam El Marzuq said the two certifications have the same goal in the long term, that is to create a palm oil industry that has resilience, competitiveness. and extensive benefits. “We see that ISPO as a state initiative is a step forward from the Indonesian palm oil industry. Indonesia has an interest in continuously improving the governance of the industry,” he said. In practice, there are still obstacles, and they become a collective homework that can only be solved if all parties are involved, including industry players and other stakeholders. “Certification is not a goal or a finish line, but our vehicle to achieve what we want to achieve,” he explained.