Indonesia legalizes illicit oil palm farms in program slammed as opaque

An oil palm plantation in Riau, Sumatra, Indonesia. (Photo: Rhett A. Butler / Mongabay)

Mongabay | 4 May 2023

Indonesia legalizes illicit oil palm farms in program slammed as opaque

by Hans Nicholas Jong

JAKARTA — Illegal oil palm plantations spanning an area one and a half times the size of London have been amnestied under an Indonesian government program that critics say incentivizes large corporations over the small farmers whom it was intended to help.

A total of 237,511 hectares (586,902 acres) of plantations have effectively been legalized under the program, which began in 2020. There are a combined 3.37 million hectares (8.33 million acres) of oil palm plantations considered illegal under Indonesian law because they were established on land zoned as forest areas.

That’s an area larger than Belgium, accounting for a significant portion of the palm oil output in Indonesia, the world’s biggest producer of the commodity. To address the problem, the government introduced the amnesty scheme through the so-called omnibus law on job creation in 2020. The hugely controversial law, deemed unconstitutional in a court challenge yet somehow still in force, did away with criminal punishment for illegal plantations and their operators, and instead allowed them to be legalized by paying fines and applying for rezoning of the land to non-forest area.

The amnesty scheme has drawn criticism from activists and some lawmakers. Critics say the scheme whitewashes the crimes of setting up plantations inside areas zoned as forest, where deforestation, wildfires and land conflicts are rife.

And while the Ministry of Environment and Forestry says the amnesty program is also geared toward small farmers who manage illegal smallholdings, most of the plantations that have benefitted to date are run by companies, according to Uli Arta Siagian, forest and plantation campaign manager at environmental NGO Walhi.

“The largest proportion [of amnestied plantations] are for companies, and so far the ones who have obtained [rezoning] decrees are corporations,” she told Mongabay. “This means that the narrative of this scheme being pro-farmer is used as a basis for actions that actually enrich and pardon the sins of companies.”

Uli also noted the opacity of the amnesty process, saying it’s closed off from public scrutiny.

“We don’t know what the process is like in detail because it’s behind closed doors,” she said. “So it’s prone to be marred by conflicts of interest, because there’s no justice in a room that’s closed.”

Lack of transparency

There are two types of plantations that qualify for exemption: those with the relevant licenses from local authorities but not from the national government, known under the program as 110a applicants; and those without permits from either the local or national governments, known as 110b.

110a plantations can win permanent legalization by paying fines and applying for and obtaining a rezoning license, also known as a forest release decree, from the Ministry of Environment and Forestry. However, 110b companies, which must also pay fines, can only continue operating for one more crop cycle, or up to 15 years. Plantations located in protected or conservation forest areas can’t be amnestied and the land will be immediately taken over by the ministry.

But the lack of transparency around the program means the public doesn’t know whether plantations that should be in the 110b category are being legalized under 110a rules, Uli said.

“We don’t have the opportunity to really make sure whether a company falls under the 110a scheme or the 110b scheme,” she said.

Risk of corruption

She also warned that the ministry’s rush to finish legalizing illegal concessions by Nov. 2, 2023, the deadline given by the omnibus law, could open the door to corruption. That date falls just before the start of campaigning for the February 2024 legislative and presidential elections, when there’s a surge of corporate money toward candidates.

Officials and candidates standing in electoral districts where illegal plantations are located could be particularly prone to taking money in exchange for helping expedite amnesty for the operators of these plantations.

“So it’s not too far-fetched to say that the 110a and 110b schemes are a transactional opportunity deliberately made to unite the interests of companies with the elites in this political year,” Uli said. “The companies get pardoned, while the elites get political funds.”

The Ministry of Environment and Forestry says it stands to collect at least 50 trillion rupiah ($3.4 billion) from companies under the 110a scheme. As of August 2022, however, it had collected just 222.7 billion rupiah ($15.2 million) from 75 companies.

Alien Mus, a lawmaker on the parliamentary oversight commission for environmental affairs, criticized the ministry during an April 6 hearing for being slow to collect the fines from the illegal concession operators. She said some companies that had complained to her that they wanted to pay but were still waiting for the ministry to tell them how much they owed.

The ministry’s secretary-general, Bambang Hendroyono, blamed the delays in part on companies being late to submit the necessary documents and pay the fines. However, he said the ministry would speed up the implementation of the amnesty scheme.

Restorative over punitive justice

F.X. Wirawan, the official at the Ministry of Environment and Forestry who’s responsible for issuing the forest rezoning decrees, said the amnesty scheme prioritizes “restorative” justice over the previous punitive measures prescribed for illegal plantations.

“So we prioritize non-litigation approach to solve [the issue],” he said.

As of December 2022, the ministry had identified the owners of 543,411 hectares (1.34 million acres) of illegal plantations, which include 616 palm oil companies. Wirawan said the ministry is in the process of rezoning forest areas for these identified plantations.

The ministry also recently identified 531 additional palm oil companies operating illegal plantations, bringing the total of identified plantation companies to 1,147, according to Walhi. Other entities operating illegally inside forest areas include mining companies and farming cooperatives.

The ministry also estimates, though Wirawan said it has yet to confirm, that small farmers account for 514,886 hectares (1.27 million acres) of illegal palm oil plantations. Unlike with the plantations linked to the companies, however, the ministry still has to identify the owners of these smallholdings before it can include them in the amnesty program, he added.

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