[Jakarta, 8 April 2020] West Kalimantan is the province with the third largest oil palm plantation area in Indonesia, yet it records the highest poverty rate on the island of Kalimantan.

“The expansion of oil palm plantations in West Kalimantan has not been directly proportional to local economic growth. Therefore, the local government should focus on balancing the types of commodities cultivated in the region. The hope is that other plantation commodities can also compete as contributors to the regional economy, making the province more resilient in times of economic volatility. Relying solely on one flagship commodity such as palm oil is certainly not a wise strategy today,” said Muhammad Teguh Surya, Executive Director of Yayasan Madani Berkelanjutan, during the online discussion “The Future of West Kalimantan in the Palm Oil Era” on 8 April 2020.

“Specifically for palm oil, the biggest challenge for the West Kalimantan provincial government is its low productivity (ranked last among the ten provinces with the largest plantation areas). The provincial government must prioritize improving palm oil productivity and refrain from further plantation expansion. This aligns with Presidential Instruction No. 8/2018 on the Suspension and Evaluation of Oil Palm Plantation Licensing and the Improvement of Oil Palm Productivity,” Teguh added.

Currently, planted oil palm areas in West Kalimantan are still dominated by private estates.

“Private plantations cover 1.09 million hectares, while smallholder plantations account for only 413 thousand hectares, and state-owned plantations cover just 56.7 thousand hectares,” explained Erlangga, Junior Researcher at Yayasan Madani Berkelanjutan.

“Between 2011 and 2018, private plantations in West Kalimantan experienced the most significant increase in planted oil palm area, expanding by 91.5 thousand hectares per year. Meanwhile, smallholder plantations expanded by an average of only 19.7 thousand hectares per year, while state-owned plantations actually declined by 770 hectares annually. This highlights the unequal distribution of palm oil land control in West Kalimantan,” Erlangga added.

Productivity Gap

Madani’s study found that, although often overlooked due to their smaller size, state-owned plantations in Landak and Sanggau regencies actually recorded the highest average productivity compared to private and smallholder plantations.

In 2017, productivity in state-owned plantations reached 3.3 tons per hectare, while private plantations in West Kalimantan (excluding Singkawang City) produced only 2.2 tons per hectare, and smallholder plantations yielded just 2.1 tons per hectare.

In 2018, productivity in state-owned plantations declined to 2.9 tons per hectare, but remained higher than private estates (2.6 tons per hectare) and smallholders (2.2 tons per hectare).

“Improving productivity is the key—not further expansion of plantation land. Another crucial step is strengthening the governance of existing palm oil plantations,” Erlangga stated.

Rural Development Concerns

From a village development perspective, oil palm plantations have not yet optimally contributed to rural progress, as reflected in the Village Development Index (Indeks Desa Membangun) in villages located near plantations.

“Most villages surrounding oil palm plantations actually have low scores in the Economic and Environmental Resilience Index,” Erlangga noted.

This is concerning, given that at least five regulations mandate companies to uphold social and environmental responsibilities toward surrounding communities. These include:

1. Law No. 25/2007 on Investment

2. Law No. 32/2009 on Environmental Protection and Management

3. Regulation of the Ministry of Agrarian Affairs/BPN No. 7/2017 on the Establishment of Land Use Rights (HGU)

4. Law No. 40/2007 on Limited Liability Companies

5. Government Regulation No. 47/2012 on Corporate Social and Environmental Responsibility

If palm oil is still expected to contribute meaningfully to economic growth at the local level, then a deep correction of current governance practices is urgently needed.

Contacts

• Muhammad Teguh Surya
  Executive Director, Yayasan Madani Berkelanjutan
  Phone: +62 812 9480 1453

• Erlangga
  Junior Researcher, Yayasan Madani Berkelanjutan
  Phone: +62 852 0856 8896

• Luluk Uliyah
  Senior Media Communication Officer, Yayasan Madani Berkelanjutan
  Phone: +62 815 1986 8887