Jakarta, 5 February 2017 – It is a wonder to look at how progressive are the policymakers when deliberating the new bill on oil palm (RUU Perkelapasawitan). The bill, included within 2017 prioritized bill just two months ago, has already been in harmonization process. Yet, if we look closely, the bill doesn’t seem like what it promises.

Deputy head Daniel Johan Commission IV — the commission that proposed the bill — stated that there are three reasons of why the bill is important. First, it will ensure farmer welfare for the bill includes Domestic Investment (PMDN) as priority which is expected to provide incentives for oil palm development. Second, the bill will improve the performance in all sectors from upstream to downstream; and third, it will be a solution to Indonesia’s crumpled permit system especially the illegal ones such as the plantations that operate within natural forest or those operating without land-cultivation permit (HGU).

In one side, oil palm plantation is the most productive amongst other commodities as it provides job opportunity and is an eminent commodity produced by Indonesia. However, it also causes issues that affect environment and social aspects. Of 11,4 million hectare (BPS, 2015) oil palm plantation in this country, the Plantation Directorate General recorded 739 conflicts with 539 cases as land conflicts (72,25%); 15 forestry-related cases (2%) and 185 other cases. The oil palm plantation bill will only legalize illegal and conflicted permits.

Based on legislator’s argument, there are several crucial points that needs to be considered. On farmer welfare, for instance, the articles in the bill don’t reflect the intention itself and instead only referred once in Article 29 about the land access for farmers. The article cannot be implemented immediately as it still need to be regulated under Governmental Law (PP) which will make the implementation take time depends on when the PP will be issued. Another article about farmer merely stipulates the partnership with big corporations. By looking at these, the ‘promise’ to improve farmer’s welfare might as well just an empty slogan.

Secondly, the oil palm bill provides privilege only for big corporations that can be seen in Article 18 verse (4): 1) reduction of income tax; 2) relief of duty upon imports of capital goods, machinery, or equipment for production in certain period of time; 3) duty relief on raw and supporting materials for production in certain period of time; 4) exemption or deferral of value added tax on imports of capital goods or machinery or equipment that aren’t produced in the country in certain period of time; 5) exemption of property tax, particularly in certain regions; and 6) product marketing support through institutions. Having discussed those privileges, Indonesian policymakers’ motive regarding the bill dubious; whether it’s purely for farmer prosperity or merely a facilitation to legalize illegal corporations.

Third, the oil palm bill provides loopholes for corporations operating in peat land, regulated in Article 23. This could be considered as violation against the government’s peat land protection program and it negates the 2016 Governmental Regulation on protection and management of peat ecosystem. The regulation outlaws all parties from operating on new land until protected and cultivation zones in peat land are determined. Yet, this stipulation won’t apply anymore once the bill officially enacted. President Joko Widodo’s program to restore 2,4 million hectare of peat land will only be the ideal of the past.

Fourth, the bill will only exacerbate the existing conflicts. Referring to the data of Agriculture Ministry’s Plantation Directorate General, land conflicts and illegal permit in natural forest and peat land are already roaming. If Indonesian legislators further legalize the bill, it will increase the conflict with local community.

The bill’s Article 78 about sustainable palm oil plantation is also questionable. The gradual mandatory certification within the next five years. This could hamper the current certification process in Indonesia (known as ISPO) which so far has indorsed 226 palm oil companies covering 1.430.105,31 million hectare and CPO production 6.746.321,93 million tons (as of Desember 2016); while 600 other companies are still in auditing process by the ISPO Certification Agency. Were legislators force to advance deliberating the bill, the entire certification process would be called off.

To minimize conflicts often happening in palm oil plantation, the bill supposedly be more focus on adopting human rights principles United Nations Guiding Principles on Business and Human Rights (HRDD). The due diligence process of human rights is supposed to cover: a) review on existing and potential impacts; b) integrating corporation’s entire personnel to be aware of such impacts; c) taking necessary actions into account to resolve impacts; (d) review on resolution effectivity in working out the impacts; and e) communicating the mechanism of impact countermeasure.

There are some HRRD principles that can be applied in oil palm bill. Mandatorily, the human rights audit can be used as business permit requirement; while voluntarily the human rights principles can be adopted through grant mechanism of investment and export support. Last but not least, a disclosure mechanism that is obligatory and presented with the products to consumers.

If read thoroughly, there are no new breakthrough in this new bill that is able to solve current problems in palm oil sector and instead it challenges government’s current effort in finding the effective solution. Besides, the lack of public participation and other relevant stakeholders (Agriculture Ministry, for instance) in deliberating the new bill must also be noticed.

Based on aforementioned points, we argue that the legislator’s statement to improve the legality and regulation consolidation of palm oil plantation is merely a rhetoric. The bill will only worsen the situation for the bill will legalize violations in peat land. With abundant regulations stipulating on plantation-related issues, it will makes things more complicated and is potentially to fail its ideal to fix Indonesian palm oil problems.

Therefore, we urge:

  1. The Commission IV of DPR RI to make farmer welfare a priority in palm oil plantation development;
  2. The Commission IV of DPR RI to halt the deliberating process if its target is only to accommodate interests of big corporations;
  3. The Government to reject futher process of Commission IV’s initiative.


The Coalition of Anti-Forest Mafia