Presented by Musdhalifah Machmud (Deputy Minister for Food and Agribisnis, Coordinating Ministry for Economic Affairs) at "GCRF TRADE Hub high-level policy dialogue: Indonesian Palm Oil Sustainability to Address the EU Deforestation-free Regulation and FOLU Net Sink 2030", on 4 Apr 2023

1. COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
JAKARTA, 4TH APRIL 2023
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2. perekonomianRI perekonomianRI Kemenko Perekonomian RI
www.ekon.go.id 2
Outline
The
Importance
of Palm Oil
Industry for
Indonesia
1
Palm Oil
and Other
Vegetable
Oil
2
Palm Oil
Policy in
Indonesia
3
Indonesian
Palm Oil
Support to
Climate
Action
4

3. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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The Importance of Palm Oil Industry for Indonesia
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4. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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The Important Role of Palm Oil Industry on the Economy
As a labor-intensive industry, the Palm Oil Sector contribute significantly to the Economy.
This sector drive economic growth, increases export and trade balance, reducing inflation and
substituting fossil fuel with renewable energy to strengthen national energy security
Production Export Value Employment Land Ownership Energy Security Industry Profile
and Stability
52
million ton
National
CPO
Production
92
million ton
World Palm
Oil
Production
*2022
USD 29,66 bill*
or
10,2 %
from Total
Export
Indonesia
One of the largest
export commodity,
exceeds oil and gas
export value
*2022
5,5
million
Direct Labor
17
million
Direct and
Indirect Labor
41%
59%
Large Plantation
41 %
of land
owned by
smallholder farmers
10,45
Million KL
Through Biodiesel
Program 2022
Saving Indonesia’s
Foreign Exchange
Rp 122,65 Trillion
Industry Labor
Intensive
And
Increases in
Indonesia’s palm oil
workforce 10 %
every year will
directly
improve people’s
welfare
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5. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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Source : Ministry of Agriculture , 2022
6,77 million Ha
(41,3 %)
1,05 million Ha(6,4%) 8,56 million Ha
(52,3%)
Indonesia Oil Palm Land
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6. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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2
Palm Oil and Other Vegetable Oil
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7. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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Palm Oil is The Most Sustainable Vegetable Oil
Palm oil is the world’s oil commodity with the best land
productivity compared to other vegetable oils. So that
Palm Oil becomes the most sustainable choice in
meeting the growing world’s vegetable oil needs.
➢ Every year the demand and supply of global
vegetable oil grows on average at the level of 8,5
million MT and 8,2 million MT, respectively
➢ As the most productive commodity, palm oil
contributes an average of 42% of the world’s total
supply of vegetable oil
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8. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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SOYBEAN
produces avg 0.45
MT Oil/Ha
requiring
445 Million Ha of farm
land
CANOLA
produces avg 0.78
MT Oil/Ha
requiring
290 Million Ha of farm
land
OIL PALM
produces avg 5 MT Oil/Ha
ONLY requiring
Source : USDA, UNDP, FAO, GAPKI,
2023
With global population estimated to reach an estimated
9.8 billion in 2050, increase in income of urban
population, it is expected that there is an additional
need of 200 million tons of vegetable oil in the future
where this can be fulfilled by palm oil since it is the
most efficient and the most productive vegetable
oil
World
Demand
40
Million Ha of farm land
saving hundreds of
millions hectares of land
that could be used for
other purposes
200
Year 2050
9,8 billion
Population
EXTRA
Production
Million Tons
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9. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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3
Palm Oil Policy in Indonesia
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10. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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National Action Plan for Sustainable Palm Oil
Presidential Instruction No. 6/2019
Regarding National Action Plan for Sustainable Palm Oil
(NAP SPO / RAN KSB) 2019-2024.
Kawasan Suaka Alam: 115.000 ha
Hutan Lindung: 174.000 ha
Hutan Produksi Terbatas: 454.000 ha
Hutan Produksi: 1,4 juta ha
Hutan Produksi Konversi: 1,2 juta ha
Menyelesaikan Masalah Kelapa Sawit di Kawasan Hutan
3,4 juta
hektar
Luas Tutupan Sawit di Kawasan Hutan
Component of RAN KSB:
Data Strengthening,
Coordination &
Infrastructure
Increasing the Capacity
and Capabilities of
Smallholders
Environmental
Management and
Monitoring
Governance and
handling of disputes
Acceleration of
Implementation of ISPO
Certification
•Roadmap to improving sustainable palm
oil production
•A reference for governments, businesses,
CSOs and international development
agencies in supporting the development
of sustainable palm oil by 2024
•Prepared jointly by all stakeholders,
including business actors who are
members of FoKSBI
NAP SPO / RAN KSB is:
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11. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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President Regulation Number 44 of 2020
Regarding the Indonesian Sustainable Palm Oil
Certification System
Sustainable Palm Oil
Development
ISPO certification is a mandatory for all types
of palm oil plantations.
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Transition period will be given to the
smallholders for 5 years (full mandatory
in 2025).
Private
Company
State-Owned
Company
Smallholder
Certification is given by a certification body
(Independence and transparent).
2
The objectives of ISPO:
3
4
Government as a regulator (Monitoring and
evaluation).
❑ To ensure and improve the management and
development of oil palm plantations in
accordance with ISPO principles and criteria;
❑ To improve the acceptance and competitiveness
of Indonesian palm oil plantation results in the
national and international markets; and
❑ To improve efforts to accelerate the reduction of
greenhouse gas emission.
Indonesian Sustainable Palm Oil (ISPO) to Support Climate Change Action
Sustainable Biodiesel and
GHG emission reductions
Have been Certified 727 Palm Oil Companies and 32 Plantation Institutions.
With a total area of 3.488 million hectares and CPO production of 21.373 million tonnes.
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12. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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1. The related implementation to the environmental permit
2. Waste management
3. Disturbance from immovable sources
4. Waste utilization
5. Material and waste managements of the hazardous and
toxic materials
6. Fire and disaster control
7. Protected areas and areas of high conservation value
7.1. Conservation of biodiversity
7.2. Conservation of water source and quality
7.3. Conservation of area with high erosion potential
8. Mitigation of the greenhouse gas emission
9. Natural forest and peat land protection that conducted by
the business actor on plantation
Principles
Compliance with legislation;
Application of good agriculture practices;
Environmental management, natural
resources, and biodiversity;
Labor responsibilities;
Social responsibility and community
economic empowerment;
Application of transparency; and
Continuous business improvement.
1
2
3
4
5
6
7
Principle 3: Environmental management, natural
resources, and biodiversity
Greenhouse Gas emission mitigation:
• Plantation Companies Shall Conduct GHG
Emission Inventory and Mitigation
ISPO Principles and Criteria
to Support GHG Emission
Reduction
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13. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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Establishmnet of CPO
Fund (BPDPKS)
Presidential Regulation
No. 61/2015
ISPO Certification
Minister of Agriculture
Regulation No. 11/2015
Strengthening
ISPO
(The New ISPO)
Preidential
Regulation
No. 44/2020
Minister of Agriculture
Regulation No.
38/2020 about ISPO
Certification System
Implementation of
Indonesia
Sustainable Palm
Oil (ISPO)
Minister of
Agriculture
Regulation
No.19/2011
Moratorium and
Improvement of
Management of
Primary Forest and
Peatland
Presidential
Instruction No.
10/2011
FLEGT License
Indonesia is
among the first
country to
implement
Voluntary
Partnership
Agreement with
EU
Launch of
smallholders
Replanting
Program
by President Joko
Widodo National
target 2.4 Million
Ha in 20 Provinces
Management of
Forest Fire
Prevention
Presidential
Instruction No.
11/2015
Moratorium and
Improvement of
Management of
Primary Forest and
Peatland
Presidential
Instruction No.
8/2015
Policy on
Primary
Forest land
settlement
Settlement of
Land Tenure in
Forest Areas
Presidential
Regulation No.
88/2017
National Action
Plan for
Sustainable
Palm Oil
Plantation
2019-2024
Presidential
Instruction No.
6/2019
2007 2011 2014 2015 2016 2017 2018 2019 2020
Moratorium for
Primary Forest &
Peatland
Presidential
Instruction No.
8/2018
Heart of Borneo
(Joint
Conservation
Agreement)
Indonesia, Brunei
and Malaysia to
conserve Borneo
Island
Establishment of
Peatland estoration
Agency
Precidenttial
Regulation No.
1/2016
One map policy
implementation
Presidential
Regulation No.
9/2016
Cessation of
Granting of New
Permits and
Improving
Governance of
Primary Natural
Forests and
Peatlands
Presidential
Instruction No.
5/2019
2021
The Job Creation
Act/ Omnimbus Law
No.11/2020
Followed by
Government
Regulation No.
23/2021, 24/2021,
dan 43/2021
We care about sustainability more than others
Indonesian Government has implemented all necessary measures to ensure sustainability management of
its palm oil sector, because we care our palm oil sustainability more than others, because it’s our life. And
the efforts still continue.
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14. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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Impact of Biodiesel Mandatory Policy
(Biodiesel implementation in 2015-2022)
the last January Launch B35 to implement B35 start in
Feb 2023
64.16 Million
Tons CO2e
42.98 Million
Kilolitres
Rp 13,14
Trillion
Increasing Added Value
(from CPO to B30)
Biodiesel Volume For
Domestic Use
Reduce Greenhouse
Gas Emissions (GHG)
Foreign Exchange
Saved due to less fossil
fuel imported
RP 299.65
Trilion
To Support The Emission Reduction, Palm Oil Based Biodiesel
Mandatory Program Has Been Launched Since 2015
The program successfully increase the use of renewable energy,
reduce CO2, creating jobs, and improve smallholders farmers income
Implementation of Biodiesel Mandatory Program also helps to generate jobs in biodiesel industry
as well as in the oil palm plantation sector. It increase demand of CPO, stabilize CPO price and
improve smallholders farmers income with the increase of Fresh Fruit Bunch (FFB) Price.
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15. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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4
Indonesian Palm Oil Support to Climate Action
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16. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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The Indonesian Government’s Commitment on Greenhouse Gas Emission Reduction
❑ Palm oil industry can supports reduction
emission target to the sectors of agriculture,
energy, industry, and waste management in
setting up mitigation activities.
❑ National emission reduction targets can be
achieved through changes in liquid and solid
waste processing technology in the palm oil
industry.
Note: Nationally Appropriate Mitigation Actions (NAMAs)
Source: BAPPENAS
Sectors
Reduction Target
(Giga ton CO2e)
Unconditional Conditional
Agriculture 0.008 0.011
- Development of plantation on non-
forest/abandoned/degraded/Other
use (APL) area.
Palm Oil : 74.53 (Million ton CO2e)
Rubber : 2.38 (Million ton CO2e)
Cacao : 5.42 (Million ton CO2e)
Forestry and Peat Land 0.672 1.039
Energy & Transportation 0.038 0.056
Industrial Processes and Product Use 0.001 0.005
Waste Management 0.048 0.078
Total 0.767 1.189
President Regulation Nr.61 of 2011 regarding the National
Action Plan for Greenhouse Gas Emission Reduction
Through the First NDC (2016) and updated NDC (2021), the
Indonesian government has strengthened the commitment to
reduce GHG emission with the unconditional target 29% and the
conditional target 41% by 2030.
First Nationally Determined Contribution (NDC)
Republic of Indonesia
-29%
2030
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17. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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Part of Climate Action, Emission Reduction is Indonesia’s main priority based on
Paris Agreement. The emission reduction target is difficult to be achieved without
direct contribution from oil palm sector.
Indonesia Palm Oil to Support Climate Action
Smallholders Replanting Program to increase productivity and
reduce illegal land clearing, implementation of ISPO,
Moratorium primary forest & peatland
Forest Fire Prevention Management and increase people’s
participation for forest conservation
Implementation of Biodiesel Mandatory program, to increase
the use of renewable energy and reduce emission, as well as
development of Palm Oil to Bio-Hydrocarbon Fuel Program
The use of POME (Palm Oil Mill Effluent) to increase
electrification ratio in rural area. POME has potential of
electrifying 1.4 million households and capable of reducing 9.8
Million Ton CO2e
Indonesia Emission Reduction
Target by 2030
(in Percentage - %)
31,89%
43,20 %
Unconditional
(Business As Usual)
Conditional (With
International
Support)
Oil Palm Sector Initiatives
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18. perekonomianRI perekonomianRI Kemenko Perekonomian RI
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High-Level Commitment for Existing Biodiesel
Mandatory Program to Support Climate Action
Roadmap of Biodiesel Mandatory
Program Implementation
President Joko Widodo has
called for the immediate
implementation of a plan to
widen the use of biodiesel in
all sectors, include Non-PSO
Transportation.
Sectors
April
2015
January
2016
January
2020
January
2025
SME, Fishery, Agriculture,
Public Transportation
(PSO)
15% 20% 30% 30%
Transportation - Non
PSO
15% 20% 30% 30%
Industry and
Commercial Business
15% 20% 30% 30%
Power Generator 25% 30% 30% 30%
“ “
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19. www.ekon.go.id
DEPUTY MINISTER FOR FOOD AND AGRIBUSINESS perekonomianRI perekonomianRI perekonomianRI
#UntukEkonomiIndonesia
COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
Gedung Ali Wardhana
Jl. Lapangan Banteng Timur No. 2-4 Jakarta
TERIMA KASIH
“Ekonomi Unggul, Indonesia Maju”
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