Malaysian palm oil producer IOI Corp posted a first-quarter net profit of 104.8 million ringgit ($23.77 million) on Friday (18/11), aided by higher contribution from property and plantation businesses and lower foreign currency translation losses. (Antara Photo/Wahdi Septiawan)

Indonesia Moratorium on New Palm Planting to Include Existing Plantations


JULY 19, 2016

Jakarta. Indonesia plans to issue in August a five-year moratorium on new palm plantations that will include a halt to approvals to extend planting into forested areas inside existing concessions, threatening output growth and palm oil investment.

The moratorium will cover around 3.5 million hectares, according to the Environment and Forestry Ministry, starting with 950,000 hectares that are being proposed by plantation companies for expansions.

Indonesia, the world's top producer of palm oil, currently has about 11.4 million hectares devoted to palm plantations.

Plantation areas that not used according to what is stipulated on their concession permits, and those indicated to have been transferred to new owners may be subjected to the moratorium, San Afri Awang, director general of forestry spatial planning at Environment Ministry told reporters.


"Existing palm plantation concessions which have productive forested areas will also be subjected to the moratorium," Awang said.

Indonesia's palm association said the move is inconsistent with a strong commitment to investors and introduces uncertainty into the regulations governing plantations.

"If plantations that already have a decree to clear forested areas are included in the moratorium, it shows that legal certainty in Indonesia is not good, and this is a bad image," Eddy Martono, an executive at Indonesian Palm Oil Association (GAPKI), told Reuters on Tuesday (19/07).

In April, Indonesian President Joko Widodo said the areas already issued to palm oil growers could be more than twice as productive "provided they use the right seeds".

Gamal Nasir, director general at Agriculture Ministry told Reuters on Tuesday that no decision has been made yet on including forested areas inside palm concessions in the moratorium plan.

GAPKI's Martono said instead of a moratorium the government should help farmers increase productivity.