Jakarta Ruling May Hurt Palm Oil Firms

ABOUT 400 palm plantation firms in Indonesia risk having 900,000ha of plantations declared illegal by the forestry ministry if they cannot show permits to clear the land, a top industry official said yesterday.

Indonesia, the world’s largest palm oil producer, has a total of 7.9 million hectares under palm cultivation and exports around 14 million tonnes of the commodity annually.

The sprawling oil palm estates in the central province of Kalimantan may be declared illegal under a government decree that applies retrospectively from 1999, Joko Supriyono, secretary general of the Indonesian Palm Oil Association, said.

Most companies have just cleared the land and started operations after securing location permits from provincial or district administrations, which previous government regulations allowed, Supriyono said.

“The disaster is that the government decree is retrospectively valid from 1999, while the plantations were mostly developed from 2000 to 2006,” Supriyono said on the sidelines of a palm oil conference in Kuala Lumpur.

The governor of central Kalimantan could help rescue the oil palm firms, Supriyono said, but it is too early to be optimistic. He will assist.

The governor has a chance to propose a new law, now being discussed, to classify forest being cleared without clearance permits as having being converted with clearance permits, Supriyono said.

“I think the governor is trying hard to help,” he said.

“Otherwise, many foreign and local companies will be affected,” he added.

The Indonesian Palm Oil Association groups about a 1,000 of the country’s firms in the sector. – Reuters

Source : Business Times

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