Indonesia promises to fine palm oil companies operating in forests

An Indonesian official said it would levy $310 million in fines on growers of palm oil on land which should be forest

A worker piles up palm fruits at a palm plantation in the Serdang Bedagai district of Indonesia's North Sumatra province November 29, 2011. REUTERS/Y.T Haryono/Files


Indonesia said on Friday that it would slap palm oil companies operating within forest areas with fines amounting to a total of 4.8 trillion rupiah ($310.1 million).

More than 475 billion rupiah ($30.7 million) in fines have been issued so far, an official from the ministry of Maritime Affairs and Investment Firman Hidayat told reporters, who did not provide further details or identify the companies fined.

But experts and campaigners said it would be difficult to check if fines had actually been paid and that the level of fines is “miniscule”.

Greenpeace Indonesia forest campaigner Arie Rompas said that the government and palm oil companies were “fearful” that new European Union rules against deforestation would exclude Indonesian palm oil. So they are “attempting to paper over the illegal destruction of the past”, he said.

Pardoning palm oil

Indonesia said last month it had identified some 200,000 hectares of oil palm plantations in areas designated as forests, which are expected to be returned to the state to be converted back into forests.

Indonesia, the world’s biggest palm oil producer and exporter, issued rules in 2020 to sort out the legality of plantations operating in areas that are supposed to be forests, aimed at fixing governance in the sector.

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Officials said the measures were necessary as some companies have already been tending the land for years.

Rompas described the measures as a “pardoning of companies that have illegally expanded their oil palm plantations into the forest estate”.

“This effectively encourages companies to continue expanding into forest as they know they will be given an amnesty later,” Rompas said.

Companies have to submit paperwork and pay fines to obtain cultivating rights on their plantation by Nov. 2, 2023, according to the rules.

While 3.3 million hectares of the country’s nearly 17 million hectares of palm plantation have been found in forests, only owners of plantations with a combined size of 1.67 million hectares have been identified. That leaves around half unaccounted for.

Lack of transparency

Aida Greenbury, an Indonesian sustainability expert, told Climate Home “It is difficult to assess or see if the fines are real and will be followed through without the government publicly announcing the identity of the companies and the maps of where they are located”.

She pointed out that palm oil companies have been slow to pay fines in the past, as reported by Mongabay.

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Rompas said the fines were “miniscule compared to the massive losses to society and the environment from deforestation”.

“The government calculation of the fines is very much in favour of the companies”, Rompas said.

Greenpeace calculate the fine as $185 per hectares whereas, they say, the companies making one or two thousand dollars per hectare a year from the palm oil plantations.

As well as contributing to climate change, deforestation endangers organgutans, Sumatran tigers and other species and can threaten indigenous peoples rights and livelihoods.

This article was updated on 27/12/24 to include Greenpeace’s comments

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