Vegetable oil industry: New breakthrough of Palm Oil Task Force

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.

Bisnis Indonesia - Industri minyak nabati: Gebrakan baru satgas sawit

28 June 2023

By: Indra Gunawan & Hendra Wibawa

After a long silence, the Task Force for Improving Palm Oil Industry Governance and Optimising State Revenue started to act on Friday (23/6). 

The Task Force that was established by President Joko Widodo through Presidential Decree No. 9/2023 on 14 April 2023 began to work by issuing an appeal to all oil palm plantation business entities. 

It is an invitation for business entities, including companies, cooperatives, and smallholder plantations, to self-report on the condition of their plantation land, along with the proof of business permits owned, through the Plantation Licencing Information System (Siperibun) website from 3 July 2023 to 3 August 2023. 

The appeal was issued directly by the Coordinating Minister for Maritime Affairs and Investment Luhut B. Pandjaitan as the Head of the Task Force for Improving Palm Oil Industry Governance and Optimising State Revenue. 

According to him, it is time for Indonesia to improve the governance of the upstream sector of the palm oil industry to become more optimal and sustainable. 

After the self-reporting process, the government will cross-check reports from business entities at random via satellite imagery and drones. 

Problems in the palm oil industry began in early 2022 when the scarcity of bulk cooking oil caused a detrimental impact on the society. 

Luhut finally asked the Finance and Development Supervisory Agency (BPKP) to conduct an audit of the entire palm oil industry, from upstream to downstream. 

As a result, BPKP discovered several findings, ranging from issues on land licencing, plasma plantations, production capacity, to CPO derivative products. 

In 2021, according to satellite imagery, oil palm plantations covered an area of 16.8 million hectares. From this area, 10.4 million hectares were private and national plantations, while the rest were smallholder plantations. “This is what we are doing in detail, [to confirm whether] this figure is correct,” said Luhut. 

The Task Force, which was formed in April 2023, involved several ministries and agencies, including the Coordinating Ministry for Maritime Affairs and Investment, the Coordinating Ministry for Political, Legal and Security Affairs, the Finance Ministry, the Environment and Forestry Ministry, the Agriculture Ministry, the Agrarian Affairs and Spatial Planning Ministry (ATR/BPN), the Home Affairs Ministry, the police, the Attorney General’s Office, BPKP, the Geospatial Information Agency (BIG), and the Indonesian Financial Transaction Reports and Analysis Centre (INTRAC). 

So, how did businesses respond? Head of the Indonesian Palm Oil Association (IPOA) Eddy Martono stated that he supported the duties of the Task Force for Improving Palm Oil Industry Governance and Optimising State Revenue. 

According to him, business entities hope that the formation of the Task Force can ensure business certainty in the palm oil industry. 

Currently, palm oil businesses often face confusions about existing laws in the palm oil industry because there are too many regulations that are governing the palm oil industry. 

“We support [the formation of the Task Force] because we need accurate data for accurate policies to be issued, which will be very influential later,” Eddy told Bisnis on Tuesday (27/6). 

Now, he revealed, the palm oil industry is governed by at least 16 ministries/agencies whose rules often contradict one another. 

“Laws can be different from government regulations.” 

Based on the Agriculture Ministry regulation, for example, the obligation to facilitate the establishment of smallholder plantation is only 20% outside the area that already has land management rights. “But in the government regulation of the Agrarian Affairs and Spatial Planning Ministry, it is less, which can be 30% or 40%, while the area does not increase, it just keeps decreasing. This is the problem,” said Eddy.

Business certainty 

With the existence of the Palm Oil Task Force, he hopes that there will be data synchronisation and guaranteed business certainty for palm oil industry players.

“[We need] one voice for the convenience of business entities to prevent chaos. With this Task Force, what needs to be improved will be continuously improved. This is for business certainty too,” said Eddy. 

He also said that the Task Force under Luhut’s steering committee could accelerate the clearing of oil palm plantations in forest areas. 

“In its implementation, IPOA hopes that the Task Force can become an arbiter. To confirm that [such company] must pay a certain amount, or [such plantation] is still in the forest area, or such forest area later has cultivation rights. We can see it there,” he said. 

Regarding forest fires, IPOA Deputy Head Satrija B. Wibawa claimed that forest fires are not synonymous with oil palm plantations. 

He emphasised that not all land fires become the responsibility of IPOA. The reason is that, until now, only 25% of palm oil companies are members of IPOA. 

In fact, Satrija said IPOA members regularly conduct trainings and readiness inspection, especially for El Nino warnings. 

“IPOA members have a strong commitment to comply with regulations, while at the same time preventing fire hazard,” he said. 

To show their preparation in handling forest and land fires, plantation companies belonging to IPOA carried out the 2023 Forest and Land Fire Preparedness Inspection in the plantation area of PT Tri Buana Mas (IBM), Sawaja Village, Candi Laras Utara District, Tapin Regency on Monday (26/6). 

Head of South Kalimantan IPOA Edy Sapta Binti said the inspection held by South Kalimantan IPOA together with stakeholders was a form of commitment from the entrepreneurs to protect their concession from fires.