New Palm Oil Plantation Permits Moratorium Ends in Indonesia, What Next?

Indonesia is the world’s biggest exporter of palm oil and on 19 September a three-year moratorium for new oil palm plantation permits expired. There have been no decisions on whether to extend or end it. The decision is crucial to Indonesia finances, the environment and Orangutans.

Borneo orangutan

A one year old Bornean orangutan with its mother. (photo by Tim Laman)

The decision has many impacts and in a world wrecked by the global coronavirus economic lockdown financial factors come into play more than in less vulnerable times. Palm oil is one of Indonesia’s most valuable exports (worth USD23 billion in 2020 according to IHS Markit Country Risk’s Anton Alifandi. Approximately 85 percent of palm oil is grown in the tropical countries of Indonesia, Malaysia, and Papua New Guinea (PNG) on industrial plantations that have severe impacts on the environment, forest peoples, orangutans and the climate.

The expansion of palm oil plantations in Indonesia and Malaysia palm oil expansion is a critical threat to orangutan habitat in Sumatra and Borneo. The moratorium reflected the Indonesian government’s intent to reduce deforestation and improve governance of the palm oil industry. President Joko “Jokowi” Widodo had pledged to freeze the issuance of new oil palm plantation permits following large forest fires in Sumatra and Kalimantan in 2015 that led to protests from Australia, Singapore and Malaysia.

In 2018 Widodo issued a Presidential Instruction on the “postponement and evaluation of oil palm plantation permits and the increase of oil palm plantation productivity”.

Goals of the moratorium

  • Improve the governance and sustainability of oil palm plantations,
  • Provide greater legal certainty
  • Reduce greenhouse gas emissions
  • Improve the welfare of oil palm farmers
  • Increase plantation productivity.


Official figures show that Indonesia’s deforestation rate has continued to decline since 2014 and in 2020 reached its slowest level since recording began in 1990, an outcome that the government attributes largely to its policies including ending permits to clear primary forests and peatlands, and the oil palm moratorium.

Threats to the survival of orangutans

The main threats in today to the survival of orangutans is palm oil. Each palm plantation destroys thousands of hectares. The orangutan population estimates are between 50,000-65,000 orangutans left in the wild and all of them live in Indonesia and Malaysia. Their habitats are beneath “fixed risk” of deforestation said he World Wildlife Fund.

As much as 3,000 are killed yearly reports the Orangutan Conservancy. The timber are cleared by unlawful logging and for conversion from rain forests to palm oil plantations. About 80% of the orangutan’s habitat was cleared within the Nineteen Nineties and early 2000s by degradation, fragmentation and clearing and generally by deliberately set fires, the journal Scientific American reported.

Loss of habitat through:

  • Deforestation
  • Palm oil plantations
  • Illegal hunting,
  • Illegal pet trade

Clearly the Palm Oil industry is the single biggest risk for Orangutans, who have lost well over 80% of their habitat in the last 20 years, and an estimated one-third of the wild population died during the fires of 1997-98.

Independent Indonesian environmental groups have acknowledged the contribution of government policy in reducing deforestation, but also pointed out to the La Niña weather system, which brings more rain.

Moving Forward?

The moratorium of the past three years will probably lead to the legalization of plantations that are currently located in various categories of forest land. Government figures show that more than 3.37 million hectares of Indonesia’s oil palm plantations (out of 16.37 million hectares) operate in four forest categories under varying degrees of legality.

The existence of plantations in forests reportedly arose from overlapping permits between the central and regional governments, overlapping maps, and corruption. Beyond the current legalization program, the government is unlikely to issue new plantation permits even if the moratorium is not extended.The government’s focus is to increase the productivity of existing oil palm plantations, particularly those owned by smallholders that make up 41% of oil palm plantation acreage.

Source: IHS Markets, Orangutan Conservancy

From The Traders Community Research Desk