Indonesia considering banning new palm oil plantations

The growth of Indonesia’s palm oil sub-sector is under threat after government announcements that it is considering banning new palm oil plantations to control forest fires.

3rd May 2016

Indonesia considering banning new palm oil plantations

The growth of Indonesia’s palm oil sub-sector is under threat after government announcements that it is considering banning new palm oil plantations to control forest fires.

Indonesia’s president, Joko Widodo stated that it could reduce the industry’s damage to the environment.

The announcement comes as the country reels from last year’s extensive environmental damage caused by forest fires, partly blamed on the industry's expansion.

Reacting to the announcement, industry stakeholders and investors warn that the ban could have a negative impact on the economy.

Indonesia is the global leader in the production of the edible vegetable oil, a main ingredient in the manufacture of shampoo, biscuits, and make-up.

The ban on granting new land for palm oil plantations is the latest measure taken by president Widodo to curb environmental damage, which includes annual smog outbreaks.

“Palm oil concessions available at the moment are already adequate,” he said, urging producers to embrace the use of improved seeds to enhance yields.

The demand for palm oil has increased over the years, leading to expansion of plantations on Indonesia’s Borneo region and Sumatra Island. This has brought huge economic returns to the sector, resulting in large tax revenues to the government.

This growth has angered environmentalists, with complaints of massive destruction of the tropical forests, the natural habitat for endangered wildlife, as well as forest fires.

The Indonesian Palm Oil Association contests the decision, arguing that the industry is the country’s economic mainstay, with at least 24 million Indonesians employed in the sector.

“Palm oil is a strategic sector which contributed $19 billion in exports in 2015,” said Tofan Madji, spokesman of the group. “It contributes to economic growth, especially in remote areas,” he told ABC news.

With activists taking a cautious stand, Greenpeace Indonesia argues that the plan will fail without tough regulations, rather than 'presidential instruction'.

Published by Green Jobs Online - 3rd May 2016

 

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