Currently, it's safe to say the world is in a state of uncertainty, particularly regarding the global economy. This includes Indonesia, where the impact of the COVID-19 pandemic on the national economy has caused economic growth to decline by approximately minus 2 percent. Consequently, many countries are beginning to consider how to survive the global economic recession.
One approach that is increasingly being advocated for implementation is a holistic shift from exploitative to sustainable economic practices, due to the externalities of environmental damage that contribute to suboptimal economic growth. Beyond these externalities, the urgency of changing economic practices is crucial for several reasons.
A recent report from the World Wildlife Fund for Nature (WWF) explains that over the past 60 years, diseases classified as pandemics, such as HIV, SARS, MERS, Zika, and Covid-19, have been caused by severe environmental damage. Meanwhile, a study from Oxford University shows that synergy between economic recovery policies and positive climate change policies offers positive prospects for economic growth and human quality of life.
Indonesia itself can initiate sustainable economic practices by improving forest and land governance to build resilience against natural disasters, the impacts of climate change, and even the possibility of another pandemic arising from environmental degradation. This could begin, for example, with improvements in the governance of palm oil plantations, which have encountered several challenges.
Turubanova's (2018) research shows that Indonesia is the country with the highest percentage of primary natural forest loss in the world, and one of the biggest contributing factors is the expansion of oil palm plantations (Busch, 2015). Furthermore, research by the Sustainable Madani Foundation also shows that more than one million hectares of forest and land fires that occurred in 2019 were closely related to the existence of oil palm concession permits, and this certainly caused significant material losses. According to the World Bank, the forest and land fires that occurred throughout 2019 caused losses of IDR 72.95 trillion, equivalent to 0.5 percent of Indonesia's GDP.
The government's momentum to improve palm oil governance could emerge if it extends Presidential Instruction (Inpres) No. 8 of 2018 concerning the Suspension and Evaluation of Palm Oil Plantation Permits and Increasing Palm Oil Plantation Productivity, also known as the Palm Oil Moratorium, which will expire in September of this year. The Palm Oil Moratorium itself could provide space for the government to explore and reorganize aspects of palm oil governance. Through the mandate given by this policy, there are several instructions that are key to improving Indonesian palm oil governance. First, this policy instructs the cessation of the issuance of palm oil plantation permits.
Although temporary, this instruction can halt the expansion of oil palm plantations in remaining forest and natural forest areas, thus hopefully reducing deforestation. According to data from the Ministry of Environment and Forestry (2018), there are 12.8 million hectares of forest areas classified as Conversion Production Forests (HPK) that can legally be converted to oil palm plantations. 6.3 million hectares within these HPK areas are natural forests, and this instruction will protect these natural forests if the Presidential Instruction on the Palm Oil Moratorium is extended.
Second , this policy mandates the evaluation of issued oil palm plantation permits. This could be a way to protect the remaining natural forests within the 3.4 million hectares of oil palm concessions (Madani, 2020). Furthermore, this instruction could also be a way to identify legal violations, such as oil palm plantations operating within forest areas, operating without proper permits, and spatial planning violations. One impact of these practices is the potential for less than optimal state revenue from the oil palm sector.
A 2016 study by the Corruption Eradication Commission (KPK) revealed that there was a potential of IDR 18.13 trillion in uncollected taxes from the palm oil plantation sector due to the lack of legal permits for palm oil plantations and the proliferation of companies operating beyond their permits or concessions. Third, this policy mandates the acceleration of land legalization for smallholders and the empowerment of smallholders so that their plantations can provide better welfare. This instruction can also accelerate the implementation process of Indonesian Sustainable Palm Oil (ISPO) certification, which requires farmers to have the certification five years after the enactment of Presidential Regulation Number 38 of 2020 concerning the Implementation of Plantation Certification.
ISPO aims to ensure the implementation of sustainability principles stipulated in relevant regulations and policies, support the achievement of Indonesia's climate commitments, and increase the competitiveness of Indonesian palm oil in both domestic and international markets. To obtain certification, farmers are required to have a land certificate and a plantation business registration certificate as prerequisites. However, due to ongoing land legality issues, the ISPO implementation process for farmers remains challenging.
The policy extension could also provide the government with more time to improve the implementation of the Palm Oil Moratorium, which has been deemed to be stalling. To date, the government lacks a roadmap for implementing the Presidential Instruction on the Palm Oil Moratorium, thus lacking any reference materials, such as implementing instructions (juklak) and technical instructions (juknis) for ministries/agencies mandated by this policy. The government has also failed to prioritize the principle of data transparency for the public, making it difficult for the public to track the progress of the policy's implementation.
Furthermore, the lack of synergy in socialization and synchronization between the Central Government and Regional Governments is another reason why the Government has not yet completed the 'homework' on palm oil governance through the Palm Oil Moratorium Presidential Instruction, making the extension of this policy a necessity. Going forward, the Government must have a strong political will to improve national palm oil governance, starting with extending the policy's validity period. Furthermore, to ensure optimal implementation of the Palm Oil Moratorium Presidential Instruction, the Government needs to create a roadmap for the implementation of the Palm Oil Moratorium Presidential Instruction, improve transparency regarding the implementation of the Palm Oil Moratorium Presidential Instruction, improve synergy between institutions, both between Ministries/Institutions at the central level and between the Central Government and Regional Governments, and involve all stakeholders in the context of palm oil governance. With the extension of the validity period and improvements in implementation aspects, it is hoped that the Build Back Better momentum for the Indonesian economy can be achieved in order to realize a resilient and sustainable Indonesia in the future.
By: M. Arief Virgy
Researcher at the Sustainable Madani Foundation
This article was published in the Kalteng Pos Daily on March 6, 2021.
