Indonesia's Palm Oil Moratorium Includes Existing Concessions
Several days ago we reported that Indonesia plans to issue a five-year moratorium on new palm oil plantation concessions in August 2016 through a presidential regulation. This moratorium aims to safeguard a healthy and sustainable environment and may also aim at reducing global criticism on Indonesia's weak governance after the devastating forest fires on Kalimantan and Sumatra as well as the spread of toxic haze to other parts of Southeast Asia between June and October 2015. A government official now says the moratorium also covers existing concessions.
San Afri Awang, Director General of Spatial Forestry Planning at Indonesia's Environment Ministry, said the moratorium will also include (1) plantation concessions that are not used in accordance with the prevailing stipulations, (2) plantation concessions transferred to a new owner, and (3) plantation concessions that include productive forested areas.
Indonesia, the world's biggest producer and exporter of crude palm oil (CPO), has approximately 11.4 million hectares of palm oil plantations. Although the government does not aim to curtail palm oil production (instead encouraging the optimization of production at existing plantations), the Indonesian Palm Oil Association (Gapki) says the moratorium threatens growth of palm oil output as well as investment in this industry because - if the moratorium indeed also covers existing concessions - it shows a lack of legal certainty.
Read more: Palm Oil Industry Indonesia: Five-Year Moratorium on New Concessions
Indonesia's Palm Oil Production and Export Statistics:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Production (million tons) |
19.2 | 19.4 | 21.8 | 23.5 | 26.5 | 30.0 | 31.5 | 32.5 | 31.0¹ |
| Export (million tons) |
15.1 | 17.1 | 17.1 | 17.6 | 18.2 | 22.4 | 21.7 | 26.4 | 25.0¹ |
| Export (in USD billion) |
15.6 | 10.0 | 16.4 | 20.2 | 21.6 | 20.6 | 21.1 | 18.6 | 17.0¹ |
¹ indicates forecast
Sources: Indonesian Palm Oil Producers Association (Gapki) & Indonesian Ministry of Agriculture
Do you agree with Indonesia's moratorium on palm oil concessions?
Voting possible: -
Results
- Yes, Indonesia needs to raise efforts to protect the environment (80.4%)
- No, an expanding palm oil industry creates jobs and brings forex earnings (14.3%)
- I don't know (5.4%)
Total amount of votes: 112
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Without including existing concessions, the moratorium would have limited impact because the big Indonesian palm oil companies have ample unplanted concessioned areas at their disposal, ergo without issuing new concessions there is plenty of room for growth (for the big companies that is)