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Enabling Conditions for Successful ISPO

admin - 02/01/2019, 11:38 WIB

Since 2016, the Indonesian government has been reworking the Indonesian Sustainable Palm Oil (ISPO) certification scheme. The new ISPO is intended to further improve palm oil governance through an instrument of state-driven certification.

The revision is needed because the outcomes of previous ISPO were considered less encouraging. The fundamental changes in this reworking effort include to shift the regulation from a ministerial regulation (Permentan) to a presidential regulation (Perpres). A question then emerges: By reflecting on the outcomes of previous ISPO, what kind of enabling conditions are needed to make the new ISPO work?  This question should be answered to understand how ISPO can potentially make a change in Indonesia’s palm oil sector.

The first enabling condition should be backed by accurate and complete data on the national palm oil sector. For instance, currently, government agencies report different sizes of oil palm plantations in the country. According to Agriculture Ministry data in 2015, total oil palm plantation area is 11.24 million hectares, but based on the Central Statistics Agency (BPS), it is 10.75 million ha. Furthermore, independent research conducted by non-governmental organizations also shows a different number. For instance, according to a study by Auriga (2018), the country’s oil palm plantations cover 16.64 million ha. And this is not even mentioning that other important data, such as the ownership of oil palm plantations (company, government, or smallholder), plantations in forest areas, the age of the plantations and the supply chain of businesses, are still confusing. Some of the data don’t even exist.

Without having accurate and complete data of the national palm oil sector, the government‘s policies don't have a strong basis. This is critical in ensuring that the policies can drive a reform.

For instance, to be relevant to ISPO, the new ISPO will address the capacity of smallholders in complying with ISPO certification. To support this notion, the government has also prepared a replanting program for smallholder plantations to improve their capacity. The question is how the government can be sure that the replanting program will benefit the targeted smallholders, since the smallholders have many classifications based on the size of capital, the ownership of the capital, the typology of cultivated land, etc. Unfortunately, the government does not have this data.

The second enabling condition is to have improved land allocation institutions and working law enforcement. The existing institutions are complex and problematic. Under lack of coordination, these institutions involve various authorities of different state agencies in issuing land permits, leading to overlapping land allocation. The attempt for reform made by the government through the introduction of the One Map Policy can be one of the solutions. However, the policy has been in the preparation stage since 2016.

After decentralization, land allocation institutions become more complex. De facto institutions have allowed companies to not adopt complete procedure for land allocation.

In many cases, oil palm plantations start their operations immediately after obtaining a location permit (ijin lokasi) and/or plantation permit (IUP) from the regional government, even if they have not obtained a formal release of forest from the Environment and Forestry Ministry and a right to cultivate (HGU) from the National Land Agency (BPN). This occurs because the complete procedure to obtain all permit documents is considered complicated and costly. In Riau, a special task force of the Regional Legislative Council (DPRD II) found about 1.7 million ha of oil palm plantations without permits in 2016.

Not only that, given the devolving authorities to regional governments through decentralizationcompanies now spend more money in regions than in Jakarta. Through decentralization, the clientelism is thriving at a regional level such as those seen in the corruption cases involving Amran Batalipu, the regent of Buol in Central Sulawesi and Hambit Bintih, the regent of Gunung Mas, Central Kalimantan, as revealed by the Corruption Eradication Commission (KPK) recently. Thus, law enforcement is the key to improve these institutions. However, since clientelistic practices in many cases weaken sanction mechanism, reform in law enforcement is essentially needed.

Without having improved land allocation institutions, the new ISPO will bring little impact in reforming Indonesia’s palm oil governance. As a state-driven or regulatory certification scheme, ISPO certification assesses land legality through permit documents such as the HGU and IUP. However, as mentioned earlier, the issuance of such documents is still problematic.

In addition, without a working law enforcement, ISPO as a regulatory instrument will not make a change. This is because a regulatory instrument will only work when sanction mechanism is working.

The third enabling condition is to have market acceptance. Although ISPO is prepared to be a fully mandatory certification, market support is still crucial. The market's acceptance can provide incentives for businessmen to comply with ISPO. The government’s reputation in managing the state forest should be improved in order to obtain market recognition. To improve the government reputation, again, land allocation institutions needs to be improved. In addition, transparency is among the significant aspects to improve the institutions.

All in all, these enabling conditions for the successful implementation of ISPO certification are interrelated. The provision of data can support the effort to improve land allocation institutions and law enforcement. Improved land allocation and law enforcement can lead to growing market acceptance along with increasing credibility of the certification. Hence, when all these three main conditions are fulfilled, the new ISPO certification will work.


Ichsan Saif, environmental policy researcher at KEHATI Foundation, Jakarta

*as published in the Jakarta Post (academia) on July 30, 2018.

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