[Jakarta, October 7, 2020] The passage of the Job Creation Law by the House of Representatives on October 5, 2020, has undermined Indonesia’s climate commitments and long-standing efforts to protect its forests over the past nine years. The implementation of this law risks entrenching large-scale deforestation across the country.
According to Madani Berkelanjutan’s analysis on the risks posed by the Job Creation Law to natural forests and Indonesia’s climate commitments, provisions that weaken environmental and forest protection could significantly accelerate forest loss. Five provinces are projected to lose all remaining natural forests due to deforestation:
Riau by 2032
Jambi and South Sumatra by 2038
Bangka Belitung by 2054
Central Java by 2056
Spatial analysis by Madani also identifies 3.4 million hectares of natural forest cover located within oil palm concessions (HGU, IUP, and other non-final permits, including location permits). These forests could have been protected through plantation permit evaluations mandated under Presidential Instruction No. 8/2018 (the palm oil moratorium). Papua has the largest area of natural forest within oil palm concessions—1.3 million hectares—followed by East Kalimantan with 528,000 hectares.
With rising crude palm oil (CPO) demand driven by biodiesel policies and increasingly relaxed licensing for oil palm expansion into forest areas, Indonesia’s opportunity to safeguard natural forests during the moratorium period is rapidly disappearing. If the 3.4 million hectares of forest within palm oil permits are lost, Indonesia will fail to meet its climate commitments, exceeding the deforestation cap of 3.25 million hectares by 2030.
This was stated by Teguh Surya, Executive Director of Yayasan Madani Berkelanjutan, in response to the enactment of the Job Creation Law.
More alarmingly, Madani’s analysis shows that 75.6% of Indonesia’s total land area—equivalent to 143 million hectares out of 189 million hectares—is entangled in overlapping permits and forest and land protection designations. Teguh Surya explained:
“Of the 143 million hectares affected by overlapping permits and protection regimes, 11.3 million hectares are industrial timber plantations (IUPHHK-HTI), 18.9 million hectares are natural forest concessions (IUPHHK-HA), 622,000 hectares are ecosystem restoration concessions (IUPHHK-RE), 11 million hectares fall under indicative social forestry areas (PIAPS), 22.7 million hectares are oil palm permits, 66.3 million hectares are under the PIPPIB moratorium map, 14.9 million hectares are mineral and coal mining permits on land, and 31.9 million hectares are onshore oil and gas concessions.”
“This massive overlap clearly shows that the Job Creation Law is not the solution Indonesia needs for sustainable investment and economic growth,” Teguh added. “Instead, the government and parliament should prioritize improving environmental and natural resource governance and strengthening the Corruption Eradication Commission (KPK). The KPK’s 2018 harmonization study already mandated the alignment of 26 natural resource and environmental laws based on sound governance principles.”
The law also fails to address ten major barriers to investment in Indonesia, including corruption, bureaucratic inefficiency, access to financing, inadequate infrastructure, policy instability, political instability, tax rates, poor work ethic, tax regulation complexity, and inflation. Rather than driving stronger economic growth, the Job Creation Law risks becoming an economic nightmare.
Efforts to protect natural forests through strengthened moratorium policies on new permits—reinforced under Presidential Instruction No. 5/2019—are now under threat. Four provinces face the largest potential losses of natural forest outside the PIPPIB area:
Central Kalimantan: 3.5 million hectares
West Kalimantan: 1 million hectares
Aceh: 342,000 hectares
West Sumatra: 254,000 hectares
According to Fadli Naufal, GIS Specialist at Yayasan Madani Berkelanjutan, the 2020 PIPPIB (Period 01) covering 66.3 million hectares significantly overlaps with various permits and land-use allocations. The largest overlaps are with onshore mining permits (7.2 million hectares) and oil and gas concessions (6.4 million hectares). PIPPIB areas also overlap with PIAPS (4.7 million hectares), oil palm permits (1.2 million hectares), IUPHHK-HA (386,000 hectares), IUPHHK-HTI (123,000 hectares), and IUPHHK-RE (4,748 hectares).
In terms of Indonesia’s climate commitments—particularly reducing deforestation in the forestry sector—the country risks complete failure. The deforestation threshold for 2020–2030, set at 3.25 million hectares, could be exceeded as early as 2025 if forest protection continues to be weakened.
“In Indonesia’s first Nationally Determined Contribution (NDC), the government committed to keeping deforestation below 3.25 million hectares by 2030, or a maximum of 325,000 hectares per year between 2020 and 2030. This target is unlikely to be achieved if deforestation-triggering provisions in the Job Creation Law are implemented,” said M. Arief Virgy, Insight Analyst at Yayasan Madani Berkelanjutan.
“On average, Indonesia’s deforestation rate between 2006 and 2018 was 688,844 hectares per year. At this pace, Indonesia will exceed its deforestation quota well before 2030—by around 2025,” he added.
Based on these findings, it is clear that the Job Creation Law is not a pathway to sustainable economic growth, but rather a serious setback to forest protection efforts and Indonesia’s climate commitments—undermining years of progress made by the government to safeguard forests and address climate change.
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Media Contacts:
M. Teguh Surya, Executive Director, Yayasan Madani Berkelanjutan
+62 812 9480 1453 | teguh@madaniberkelanjutan.idM. Arief Virgy, Insight Analyst, Yayasan Madani Berkelanjutan
+62 877 0899 4241 | virgy@madaniberkelanjutan.idLuluk Uliyah, Senior Media Communication, Yayasan Madani Berkelanjutan
+62 815 1986 8887 | luluk@madaniberkelanjutan.id
