T

he government will impose a moratorium on new oil palm plantation licenses in the near future on the back of weakening global demand for palm oil as well as massive deforestation fueled by the overexpansion of oil palm plantations in the world’s top palm oil producer.

Peatland Restoration Agency (BRG) head Nazir Foead said the plan had been discussed by the Office of the Coordinating Economic Minister since last year.

“Because the global price of CPO [crude palm oil] is falling anyway due to weakening demand. All vegetable oil prices are falling because when prices skyrocketed five years ago, everyone planted [oil palm trees],” he said on the sidelines of the third Singapore Dialogue on Sustainable World Resources.

Furthermore, based on the office’s calculation, the country can meet its target of producing 40 million tons of CPO by 2020 sustainably without expanding existing oil palm plantations. Indonesia’s CPO production in 2015 was estimated at 31 million tons, up from 27 million tons in 2013.

“The office calculated that if we have 11 hectares [of oil palm plantations] and we want to increase our production to 40 million tons, then it’s enough as long as the productivity is increased,” Nazir said.

Under the moratorium, the government will not issue new licenses to convert healthy forested land or vulnerable peatland into oil palm plantations.

Nazir said President Joko “Jokowi” Widodo would soon issue a legal basis in the form of either a presidential decree or presidential instruction after he announced the moratorium plan on Thursday.

“It’s been decided as the President announced the plan yesterday on the Thousand Islands,” he said.

Jokowi said on Thursday that the moratorium aimed to increase the productivity of smallholders.

“There is a lack of quality seed use, especially by smallholders. If this is done, then it [CPO productivity] can be increased,” he said.

Government officials and the private sector have reacted positively to the plan.

Indonesia’s second-largest pulp and paper producer, Asia Pacific Resources International Limited (APRIL), said the company fully supported the moratorium.

“We fully support [the plan] because our focus is on intensification over expansion. So we have to make sure that each hectare of our land is working hard for us,” APRIL executive committee member Anderson Tanoto told The Jakarta Post.

He pointed out that the current productivity of smallholders in Indonesia was very low, between 2 and 3 tons per hectare per year, compared to those of companies which could reach up to 6 tons.

“So if we increase [smallholders’ productivity] to 4 or 4.5, then automatically the CPO production of Indonesia will be higher,” said Anderson, who is also the son of the founder of Royal Golden Eagle, the parent group of APRIL.

Singapore also welcomed the moratorium, with its environment and water resources minister, Masagos Zulkifli Bin Masagos Mohamad, saying that “it is certainly laudable”.

Singapore has long been a staunch critic of Indonesia’s land and forest management as it often falls victim to the haze caused by the annual land and forest fires. The transboundary haze pollution cost Singapore an estimated S$700 million in 2015 alone.

Nazir, meanwhile, said that the moratorium would greatly benefit his work to restore up to 2 million hectares of damaged peatland as he planned to move the country’s dependency on palm oil to other crops that were more suitable for the characteristics of peatland.

“We already said from the very beginning to not plant acacia and oil palm because it will not work [with the wetness of peatland]. Oil palm demands low water table. Therefore, pick crops that can grow well even if the peatland is flooded. With the moratorium, oil palm cannot be planted [in the restoration area],” he said.