S

everal stakeholders have criticized the palm oil bill currently being deliberated, saying that the bill does not tackle the sector’s major issues, including land legality and sustainable cultivation.

Vice chairwoman of the Office of the Coordinating Economic Minister’s Indonesian Sustainable Palm Oil (ISPO) empowerment team, Diah Suradireja, said the bill still lacked solutions to land legality problems, which had led to low plant productivity and difficulties in managing recurrent land fires that were serial causes of massive haze affecting not only Indonesia but also neighboring countries.

At least 41 of the overall 105 articles in the bill were just exact copies of the 2014 Plantation Law, Diah said.

“None of articles in the bill touches on land legality issues and provides clear explanations on how small farmers will be assisted,” she explained.

Legitimacy over land remains a big issue for growers of the commodity as only 1 percent of the total 4.8 million hectares (ha) is run by smallholders have certificates, according to an estimate from the Indonesian Oil Palm Smallholders Association (Apkasindo).

Smallholder plantations account for 34 percent of overall oil palm plantations nationwide, which amounts to approximately 14 million ha. Meanwhile, their output represents 36 percent of domestic production, where last year the sector produced 33 million tons.

Absence of land certificates has hampered the growers’ efforts to access funding from the government and banks in order to replant, which is necessary to increase productivity through revitalization of old plantations.

Consequently, local plantations can only produce approximately 2.6 tons of palm oil per ha, lagging behind their Malaysian rivals at 4 tons per ha.

Boosting productivity is vital to help Indonesia raise its annual palm oil output to 40 million tons by 2020 from the 30 million tons at present.

Diah further said the land legality issues also obstructed the state in producing an integrated map of the real size of oil palm plantations in the field to identify the culprits behind the annual land fires.

As one of the priorities of this year’s National Legislation Program (Prolegnas) list, the palm oil bill is expected to pass into law by 2017, according to the bill’s task force chairman, Firman Subagyo.

The law is expected to protect and expand the palm oil industry, which is considered a strategic sector for Indonesia, the world’s largest producer of the commodity.

It will stipulate, among others, the establishment of a palm oil development body that handles both the upstream and downstream industry. It is said the body will resemble the Malaysian Palm Oil Board, and will be directly under the responsibility of the President.

Apkasindo secretary-general Asmar Arsjad has pointed out that some articles are still obscure, such as those pertaining to facilities for big plantations and their smallholder partners, such as tax incentives. The bill is also in favor of big firms over small firms by way of its definition of a palm oil business and its unfair treatment against smallholders through a Rp 100 million (US$7,462) fine on farmers if deemed unable to apply good practices in planting, such as using fertilizers, he adds.

“We’re small farmers and we don’t fertilize [the land]. Why are we fined for not taking care of the plants when the state provides no assistance,” Asmar said, adding that the provision of seedling subsidies should also be clearer.

Palm oil business watchdog Sawit Watch also criticized the government’s alignment to investors’ interests, such as through various tax incentives like income tax reductions. It also said in its recent media statement that the bill still did not address some critical issues caused by the expansion of the domestic palm oil industry, such as environmental degradation, forest and land fires, and social conflict.