Presidential Regulation No. 44 year 2020, a Momentum to Improve Governance of Palm Oil: Pace to Probe Dark Spots in Palm Oil Business

Presidential Regulation No. 44 year 2020, a Momentum to Improve Governance of Palm Oil: Pace to Probe Dark Spots in Palm Oil Business
23 March 2020

After a very long process, President of Indonesia has enacted the Presidential Regulation Number 44 year 2020 on Certification System of Indonesia Sustainable Palm Oil, which later called Perpres ISPO on 13 March 2020 and has been promulgated on 16 March 2020.

This Perpres is enacted in consideration of issues on high labor absorption and to give assurance for social, economic and environmental aspects in palm oil businesses in line with the regulations, to which revamping process of Sustainable Palm Oil Certification System is required. The latter Regulation of Agricultural Minister, which administer the Certification System of Indonesia Sustainable Palm Oil, is perceived to be out of international demand and legal requirements and hence needs to be replaced and re-regulated with the Perpres.

Long journey of Perpres ISPO drafting process emerged when Indonesian Palm Oil Smallholders’ Association (APKASINDO), which tenaciously lobbied Indonesian Parliament and the President, to object Government’s plan to enact ISPO regulation which requires smallholders to be certified. This refusal is posed as this certification system is conceived to be a burden to smallholder. The reason behind is that there are too many obstacles faced by smallholders in obtaining the certificate which includes the legality of the land, limited human resources and unclear cultivation system, to which the complicated problem is mainly on the overlapping issues of smallholders’ land with forest area. ISPO itself requires the land shall not be in forest area, whilst APKASINDO data shows that 54 percent of smallholders’ land are indicated to be inside forest area which cannot be utilized for cultivation.

To this end, the issues are expected to be solved by this Perpres ISPO which covers, firstly the improvement of ISPO certification governance which opens participation, accountability and transparency. Secondly, re-arrangement of ISPO Commission institutionalization ranging from membership, duty, function and integrity perspectives. Thirdly, set the National Accreditation Committee (Komite Akreditasi Nasional) function in ISPO certification system. Fourthly, improve standard and requirements of ISPO certification. Fifthly, increase awareness on deforestation, peatland conversion and Green House Gasses (GHG) emission. Lastly, build mechanism of a credible independent monitoring. Materials of this Perpres are divided into 7 (seven) Chapters and 30 (thirty) Articles which set ISPO certification; institutionalization; acceptance, market competitiveness and civil society roles; development and supervision; and sanction.

Moreover, according to Article 3 of the Perpres, implementation of ISPO certification system is aimed to: a. assure and increase management and development of oil palm plantation in line with ISPO principles and criteria; b. increase acceptance and competitiveness of Indonesian palm oil products in national and international level; and c. increase the acceleration effort on GHG emission reduction.

As for the new and crucial arrangement on ISPO certification system set by this Perpres are on the following: mandatory application of ISPO certification system for both private and smallholders, although for smallholders will be applied 5 (five) years after the promulgation of this Perpres; decision making mechanism of ISPO certification system will be more accountable; transparency and comply to international standards; reformulation of ISPO principles and criteria; funding for ISPO certification, especially for smallholders; institutionalization of ISPO certification which comprises of Steering Committee, ISPO Committee, National Accreditation Committee, ISPO Certification Bodies and Palm Oil Businesses; roles of the Government and all stakeholders in increasing the market acceptance both nationally and internationally; roles of civil society, businesses and stakeholders in management and implementation of ISPO certification, to which one of them is the participation in Independent Monitor as one of the part of ISPO Committee; and community development for smallholders in preparedness and compliance to ISPO principles and criteria.

Transitional Provision is also embedded in this Perpres right after its promulgation, nonetheless, ISPO certificates issued before the enactment will still be considered eligible with several clauses. On another note, implementing regulation of this Perpres, in the form of Agricultural Minister Regulation (Peraturan Menteri Pertanian) shall be set no later that 30 (thirty) days after the promulgation.

To conclude, this Perpres of ISPO Certification System is conceived to answer all queries, challenges and demand of a more sustainable palm oil which leads to legal certainty, justice and meaningful development. It is also foreseen that this development will be executed hand in hand with the mandate of Article 33 of Indonesian Constitution and relevant regulation.

This momentum shall be a driving force for betterment.

Author: Diah Y. Suradiredja, Senior Advisor  SPOS Indonesia

Perpres ISPO can be downloaded via