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Oil palm plantations’ partnership with farmers under scrutiny
Palm oil plantation companies are required to allocate 20 percent of their plantation area to plasma farmers.
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Workers plant oil palm seedlings at a plantation in Kapuas Hulu, West Kalimantan. (Antara/Andre)
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alm oil companies are currently under scrutiny from Indonesia’s independent business watchdog for their lack of commitment to comply with the partnership regulation that requires them to allocate 20 percent of their plantation area to plasma farmers.
This partnership was enforced 12 years ago under Agriculture Ministerial Regulation No.26/2007 on the guidelines for plantation business licensing, but farmer associations and environmental groups say the regulation has not been fully enforced.
Business Competition Supervisory Commission (KPPU) commissioner Guntur Saragih said at a press conference on Tuesday that it was investigating violations of the regulation by large palm oil plantations.
“We are not talking about a monopoly or unhealthy business practices, our focus in this matter is on how the government can ensure fair welfare distribution in the palm oil sector by allocating 20 percent of the land to communities,” he added.
Based on Article 15 of Agriculture Minister Regulation No.98/2013 on the guidelines for the issuance of permits for plantation companies, which is a revision of Agriculture Minister Regulation No.26/2007, any plantation company that applies for a land permit starting at 250 hectares should allocate at least 20 percent of its plantation area to plasma farmers.
Guntur said the legal basis for the business watchdog’s investigation is the Law on Small and Medium Enterprises (SMEs) No. 20/2008 and Government Regulation No. 17/2013 on SMEs as the guidelines for the implementation of the Law on SMEs.
The regulations, he said, gave the KPPU the right to investigate whether or not a palm oil plantation had complied with the requirement to allocate 20 percent of its plantation area to plasma farmers. If found guilty, the KPPU has the authority to request that permit issuers, either local administrations or the Agriculture Ministry, should be sanctioned through warnings or permit revocations.
