T

he government is set to steer Indonesia’s palm oil industry toward more socially and environmentally friendly practices by improving the national sustainability standards, known as Indonesian Sustainable Palm Oil (ISPO), on the back of pressure from developed countries.

The ISPO is a certification for legal compliance issued by the government. Five years into its implementation, however, it has largely failed to gain market recognition and access to premium EU markets.

This absence of demand for ISPO-certified palm oil is because the ISPO is not regarded as sufficiently rigorous enough as it merely requires producers to comply with applicable laws and regulations on palm oil in Indonesia.

“The credibility of the ISPO is questioned because there are still some things that need to be perfected, such as the software and its implementation in the field,” the Agriculture Ministry’s special staffer for environment, Mukti Sardjono, said recently.

Furthermore, years of persistent fires and haze in Indonesia have tarnished the image of palm oil, with unsustainable palm oil plantation practices resulting in the burning of millions of hectares of forest in the country.

The government’s commitment to promoting sustainable agro-forestry practices is also questioned because it has campaigned heavily against a “zero deforestation” pledge, or IPOP, signed by leading palm oil producers in Indonesia, which was eventually dissolved following pressure from the government.

At the same time, demand for sustainably produced palm oil is continuing to increase, especially from some of Indonesia’s most important export markets.

In December 2015, Denmark, France, Germany, the Netherlands and the UK signed the Amsterdam Declaration to support a fully sustainable palm oil supply chain by 2020. China is also developing a Guide for Overseas Investment and Production of Sustainable Palm Oil by Chinese Enterprises, which will spur trade and consumption of certified sustainable palm oil within China.

Therefore, the government is actively seeking ways to ensure the ISPO is well-regarded and recognized by EU markets to compete with other schemes. “Because by 2020, Europe will require all palm oil products sent there to be sustainable. Other markets haven’t done that yet, like India, China and Pakistan. But they will follow [the EU’s footsteps] eventually,” ISPO commission secretariat head Herdradjat Natawidjaja said.

One of the ways is to increase the legality of the ISPO to boost its credibility. Currently, the ISPO is only regulated by an Agriculture Ministry regulation.

However, the government is proposing to upgrade the legal status of the ISPO to a presidential regulation to boost the participation and coordination of all stakeholders, not only the Agriculture Ministry.

According to Herdradjat, the presidential regulation will address the weaknesses of the ISPO.

“Starting from the system, the organization and the acceptance, all of these will be discussed by various stakeholders so that by the time the ministerial regulation is upgraded to the presidential regulation, it has addressed all the concerns of stakeholders,” he said.

Herdradjat said that things would be different this time as the government realized the importance of engaging all stakeholders, including small farmers, in creating a fully sustainable palm oil industry. “We will look at why there are not many ISPO certificates for farmers,” he said.

Besides struggling to gain international recognition, the ISPO also has a low adoption rate locally, even though it is mandatory.

Out of a total of 11 million hectares of palm oil plantation in Indonesia, only 1.4 million ha are ISPO-certified.

These 11 million ha produced 31 million tons of crude palm oil in 2015. Yet, only 6 million tons of this total were ISPO-certified.

The improvement of the ISPO is expected to be finished in the next six months, according to the Office of the Coordinating Economic Minister.

Based on the office’s calculation, the country can meet its target of sustainably producing 40 million tons of CPO by 2020 without expanding existing oil palm plantations.