Palm Oil Pandora: Primadona of Non-Oil and Gas Exports to Environmental Destruction

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Illustration of oil palm plantations. (picture: beritagar)

Lately, oil palm has become a conversation in a number of timelines. There are at least two underlying events: a video of less than one minute uploaded by the Indonesian Solidarity Party (PSI) entitled “Cheap Gadgets for Palm Oil” and the issuance of Presidential Instruction number 8/2018 on the Delay and Evaluation of Licensing and Increasing Productivity of Oil Palm Plantation.

Palm oil is like a Pandora’s box in Greek mythology. His presence brings blessings as well as disaster. From the perspective of industry players, palm oil plays a role in economic growth by generating foreign exchange and employment. Meanwhile, we cannot deny that oil palm also participates in environmental damage.

Processed Elaeis guineensis can be used almost in various types of products for our daily needs. Starting from cooking oil, chocolate, margarine, lipstick, soap, instant noodles, bread and cakes, shampoo, detergents, medicines to biodiesel.

The Indonesian Palm Oil Association (Gapki) claims the value of palm oil exports in 2017 broke records throughout history. Up 26 percent compared to 2016, the value of palm oil exports reached 22.97 billion US dollars. The value was obtained from 31.05 million tons of export volume, up 23.6 percent compared to 2016 of 25.11 million tons.

The amount of oil palm production and its derivative products is in line with labor absorption to reduce the unemployment rate. According to Industry Minister Airlangga Hartanto, around 16-20 million workers can be absorbed by the palm oil industry from upstream to downstream. While the Indonesian Plantation Statistics data for 2016, oil palm plantations absorbed 5.7 million workers. Of these 2.2 people are small scale smallholder farmers. Concerning tax matters, as reported by, the palm oil sector donates Rp 12 billion per year. Taxes are collected from plantation funds and customs.

Present as a promising commodity, oil palm cultivation continues to be encouraged. Reported by, the area of oil palm plantations in Indonesia was only around 300,000 ha in 1980. Decades of years ago, in 2014 the area became 11 million ha. Quoting, the Directorate General of Plantations at the Ministry of Agriculture said that currently the area of oil palm plantations reaches 14.03 million ha.

Oil palm cannot coexist with other types of plants or monocultures. This means that increasing oil palm production will increase deforestation rates and increase demand for new land clearing. In a report titled The Environmental Status of Borneo 2016, the World Wide Fund for Nature (WWF) said the expansion of oil palm plantations caused deforestation.

Still remember the forest and land fires that occurred a few years back? Reporting from Tribunnews, forest and land fires resulted in significant losses, President Joko Widodo said the country lost Rp 220 trillion.

The Indonesian Forum for the Environment (Walhi) in August 2018 found many hotspot locations located on oil palm plantation concessions. According to Walhi, 4.3 million ha of peatlands were destroyed by 291 companies, 193 of which were oil palm companies, because the forest land that was burned or burned was thought to be used as a new oil palm plantation.

In addition, oil palm is also allegedly causing land loss experienced by farmers in Toluonua and Peohuko Villages, Mowila District, South Sulawesi. Conflict between farmers and PT Merbau Jaya Indah Raya caused the loss of 300 hectares of rice fields. The company argues that it has a right to use (HGU) from the district government and comes without the consent of the land owner.

Another effect of oil palm expansion is the loss of wildlife habitat. Recently in July 2018, one adult male orangutan was found dead with bullets lodged in his body in the canal concession of PT Wana Sawit Subur Lestari (WSSL) II, Seruyan Regency, Central Kalimantan.

In addition to orangutans in Kalimantan, a similar event also experienced by elephants in Sumatra. Losing its habitat, elephants come to oil palm plantations. But their presence was considered a threat and ended in death.

Another thing that also needs to be questioned is the tax revenue from the palm oil industry sector after the findings of the Corruption Eradication Commission (KPK). According to the KPK, around 63 thousand oil palm industry taxpayers are suspected of avoiding or evading tax payments. Of the 70,918 registered taxpayers – individuals and entities – only around 9.6 percent reported Tax Returns (SPT). The realization of tax revenue in 2015 was only Rp.22.2 trillion with a cash flow of Rp.2.2 trillion per day.

For the next 3 years, it is hoped that new land clearing for oil palm plantations will not occur. This is due to the aforementioned Presidential Instruction signed by President Joko Widodo on September 19, 2018. The legal basis gave instructions to ministries / institutions from postponing new licenses to evaluating HGUs for oil palm plantations.


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