Explainer: What next after Indonesia ends freeze on palm permits?

JAKARTA, Oct 29 (Reuters) - President Joko Widodo of Indonesia in September ended a temporary freeze on new permits for palm oil plantations, in place since 2018, despite environmentalists' calls for it to be extended to protect the forests.

Top officials have said new permit applications will be rejected, but experts warned of a lack of legal clarity, and environmentalists feared an increase in forest clearance.

Indonesia is home to the world's third-largest tropical forests and is a top producer of palm oil.

Forest fires - often to clear up land for plantations - have been an annual disaster in the country, but green groups said the moratorium has played a part in reducing primary forest losses.


Jokowi, as the president is popularly known, said he had considered the moratorium permanent since parliament passed an omnibus "Job Creation" law in 2020, which brings in a new approach for processing business permits in Southeast Asia's largest economy.

"I've ordered for this to be inserted in the law so that we don't have to renew it every time it expires ... So when (the country's) leadership changes, there is no change in policy," the president said in an interview with Reuters last week.

Environment Minister Siti Nurbaya Bakar said her office will not process new permit applications.

Legal experts say what happens with permits is still an open question.

"The Job Creation law does not have any correlation with the moratorium," said Ahmad Redi, a resources laws expert with the Tarumanagara University. He noted that instead, the law made it mandatory for authorities to process all applications within five days.

"Anyone whose permit is rejected could question this, because legally there is no ban for anyone to apply for permits and there is no ban for officials to issue new permits," he said.


The moratorium was intended to temporarily halt new permits to allow authorities to resolve problems surrounding thousands of permits issued before 2018.

It was also aimed at preventing forest fires and land conflicts, as well as increasing productivity in cultivation areas.

The moratorium was Jokowi's response to devastating forest fires in 2015, when approximately 2.6 million hectares (6.4 million acres) of land were burned.

The deforestation rate has since fallen, with last year's size of burnt forests at the lowest in 20 years of 115,500 hectares, officials said.

The total palm oil cultivation area is about 16.4 million hectares, and authorities found nearly 3.4 million hectares of plantations in forest-designated areas during the moratorium.

The 2020 law introduces measures to legalise these problematic plantations under certain requirements, but does not specifically ban new permits. It requires new palm plantations to be no larger than 100,000 hectares.


Environmentalists are still calling for the moratorium to be reinstated, arguing Indonesia is at risk of losing further tracts of forest to plantations without it. read more

Forest Watch Indonesia has estimated more than 21 million hectares of forest could be destroyed for new palm plantations, based on areas that fit cultivation requirements, executive director Mufti Fathul Bari said.

No palm oil companies are seeking to expand or open up new plantations, said Eddy Martono, secretary general of Indonesia's palm oil business association, GAPKI.

Still, activists said a lack of clear regulations presents a grey area.

"I'm afraid if it's only in the form of verbal statements, while there is no legal umbrella, who can guarantee what kind of implementation there will be?" said Trias Fetra of environmental group the Sustainable Madani Foundation.

"The palm moratorium is important for Indonesia's climate commitments," he added, noting that the country has pledged to make its forests and peatlands a net carbon sink by 2030.

Reporting by Gayatri Suroyo and Bernadette Christina Munthe Additional reporting by Stanley Widianto. Editing by Gerry Doyle

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