Balancing and counterbalancing : the Indonesian state addressing pressures to improve palm oil sector sustainability

The thesis discusses the challenges of the Indonesian state in balancing economic development, social equity and environmental sustainability in addressing and responding to sustainable palm oil issues. The main objective of this research is to unravel the roles of the Indonesian state in balancing environmental sustainability and economic development in response to the different international and domestic demands. The thesis analyses four steering mechanisms of the state: finance, force, external coordination and internal coordination. The empirical cases of each governance mechanism are developed based on multiple case studies. The first case study is about the different roles of the Indonesian state in arranging finance schemes for palm oil development. Based on the analysis of major change in the post-colonial history of the Indonesian political economy since 1945 until 2017, the study shows that the Indonesian state has adopted and combined different roles that reflected different political and economic regimes and their changes. Each role was used to promote economic development, albeit in varying ways. The second case study is about the upsurge in the use of violence by the state to curb illegal plantations. There are five drivers identified from these disciplinary actions: security problems, pressure from non-state actors, state humiliation, contestation of the state’s legal authority and collective trauma. These drivers associate with the state to maintain its legitimacy. The outcomes of the disciplinary actions were constrained by a lack of policy coherence, challenges from powerful locals, violent resistance, and a lack of awareness of the development economics context of the Indonesian palm oil sector. The state employed repressive actions, which can be considered as an expression of eco-authoritarianism. However, in some cases non-state actors were also involved in planning and organising these actions, which can be seen as an expression of the green state. The third case study is about various responses of the Indonesian state to the emergence of non-state initiatives promoting sustainability in the palm oil sector. As the world’s largest palm oil producing country, one would expect that the Indonesian state treats every non-state governance initiative as an interference. This was not the case. By 2015, the Indonesian state had given different responses to non-state initiatives: limited interaction with RSPO (Roundtable on Sustainable Palm Oil), confrontation with IPOP (Indonesia Palm Oil Pledge), and good collaboration with InPOP (Indonesia Palm Oil Platform). These responses of the state also depend on and differ much per actor constellation, the phases of development of the non-state initiative, and the governmental level involved. The fourth case study explores the challenges of the Indonesian state to develop internal coordination for managing forest, land and plantation fire (FLPF). FLPF is a highly strategic and politically sensitive issue for Indonesia, which creates pressure from citizens, business, supranational and subnational NGOs, and neighbouring countries. The forestry and plantation authorities are involved in power bargaining and agency ideology competition. Generally speaking, the Indonesian state is struggling with financing an integrated action to manage FLPF. The presence of a national leadership willing to act decisively to develop internal coordination contributed significantly to the decrease of FLPF in 2016 and 2017. Based on the findings of the four case studies, the conclusion is that the Indonesian state has been persistently supporting the palm oil sector, changing and adapting its roles under various political-economic regimes. A constant concern, though, has been the promotion of the palm oil sector for economic development. In the present situation of Indonesia, the state has been facing a two-fold challenge: modernising its economic development focus by addressing both social equity and environmental sustainability concerns, and managing the transition from an authoritarian regime to a democratic regime. Such a transition in political orientation demands the state be more sensitive to concerns of non-state actors. The state tries a new balance between an authoritarian and top-down approach with a participatory and bottom-up approach in governing the palm oil sector.</p

Accelerating Certification of Oil Palm Smallholders through Institutionalization of Various Incentives

Sustainable palm oil certification has become a global demand, particularly in the market. However, the implementation of both Roundtable of Sustainable Palm Oli (RSPO) and Indonesian Sustainable Palm Oil (ISPO) certification schemes is relatively slow. This study aims to analyze to what extent incentives can accelerate sustainable palm oil certification, from what sources those incentives can be arranged, and types of incentives are appropriate for palm oil smallholders. The research uses quantitative and qualitative methods based on literature reviews, in-depth interviews with key stakeholders, and a survey of 455 farmers in two Indonesian provinces (Riau and West Kalimantan). Based on quantitative analysis, the reasons behind more progressive certification achievements in Riau remain unrevealed while in West Kalimantan, Fresh Fruit Bunches (FFB) price, easiness to obtaining loans with low interest, and easiness of selling FFB have a significant influence on accelerating certification. Using a qualitative approach, smallholders show their expectation of having incentives. In Riau, incentives expected are higher FFB prices and a simpler procedure to get the Environmental Management Statement (SPPL) document. In West Kalimantan, higher FFB prices and availability of low interest loans are expected to become incentives. These incentives can be mobilized from intergovernmental fiscal transfer mechanisms such as revenue-sharing mechanisms, export levies, and environmental funds. Smallholders also expect clarity of incentives generated from ISPO certification, particularly in price and market access, which requires the government’s initiative to develop synergy with various stakeholders. To be practical, incentives were not only for smallholders but also for the government officials at the province, district, and village levels, as the position of the local government is very important in preparing, encouraging, and mobilizing farmers, as well as in strengthening institutions for improving palm oil governance. In the implementation of RSPO certification, the collaboration between the Indonesian government (through the Ministry of Cooperatives and Small and Medium Enterprises) and the RSPO becomes clear evidence of central government support. At the sub-national level, the Riau and West Kalimantan Provinces have developed the Regional Action Plans (RAD) for sustainable palm oil as a policy commitment to accelerate both RSPO and ISPO certification

Accelerating Certification of Oil Palm Smallholders through Institutionalization of Various Incentives

Sustainable palm oil certification has become a global demand, particularly in the market. However, the implementation of both Roundtable of Sustainable Palm Oli (RSPO) and Indonesian Sustainable Palm Oil (ISPO) certification schemes is relatively slow. This study aims to analyze to what extent incentives can accelerate sustainable palm oil certification, from what sources those incentives can be arranged, and types of incentives are appropriate for palm oil smallholders. The research uses quantitative and qualitative methods based on literature reviews, in-depth interviews with key stakeholders, and a survey of 455 farmers in two Indonesian provinces (Riau and West Kalimantan). Based on quantitative analysis, the reasons behind more progressive certification achievements in Riau remain unrevealed while in West Kalimantan, Fresh Fruit Bunches (FFB) price, easiness to obtaining loans with low interest, and easiness of selling FFB have a significant influence on accelerating certification. Using a qualitative approach, smallholders show their expectation of having incentives. In Riau, incentives expected are higher FFB prices and a simpler procedure to get the Environmental Management Statement (SPPL) document. In West Kalimantan, higher FFB prices and availability of low interest loans are expected to become incentives. These incentives can be mobilized from intergovernmental fiscal transfer mechanisms such as revenue-sharing mechanisms, export levies, and environmental funds. Smallholders also expect clarity of incentives generated from ISPO certification, particularly in price and market access, which requires the government’s initiative to develop synergy with various stakeholders. To be practical, incentives were not only for smallholders but also for the government officials at the province, district, and village levels, as the position of the local government is very important in preparing, encouraging, and mobilizing farmers, as well as in strengthening institutions for improving palm oil governance. In the implementation of RSPO certification, the collaboration between the Indonesian government (through the Ministry of Cooperatives and Small and Medium Enterprises) and the RSPO becomes clear evidence of central government support. At the sub-national level, the Riau and West Kalimantan Provinces have developed the Regional Action Plans (RAD) for sustainable palm oil as a policy commitment to accelerate both RSPO and ISPO certification

The disciplining of illegal palm oil plantations in Sumatra

The Indonesian state has issued many regulations to control palm oil expansion, but they have been weakly enforced, resulting in widespread illegal plantations. During the last decade, Indonesian authorities have used force to reduce illegal plantations. This article analyses the drivers behind these actions and questions to what extent they reflect the rise of eco-authoritarianism. By investigating six cases of disciplinary action in Sumatra, we conclude that the Indonesian state is neither practising eco-authoritarianism nor constituting a green state. The disciplinary action, however, has had limited success in environmental terms due to policy incoherence, violent contestation and the sector’s historical context

Unraveling disputes between Indonesia and the European Union on Indonesian palm oil : from environmental issues to national dignity

Indonesia has been the largest palm-oil producer in the world since 2006. The country’s palm-oil products are exported globally, including to member states of the European Union. In recent years, European countries have implemented increasingly stringent regulations on palm-oil imports, including from Indonesia, through policies such as the Renewable Energy Directive (RED) II. This study qualitatively analyzes Indonesia’s responses to these policies. We collected data using in-depth interviews and focus-group discussions with government policymakers, activists from nongovernmental organizations, and oil-palm smallholders and entrepreneurs in Indonesia. We demonstrate that the European Union policy has experienced a shift in recent years which has made it more difficult for Indonesian palm-oil products to enter European markets. The Indonesian government views these policies as an environmental issue, a form of trade war, and a challenge to the sovereignty and dignity of the nation. The government’s responses have included improvements to cultivation and business practices, demands for broader and more inclusive policies, and “resistance,” for example, by referring the case to the World Trade Organization

The Oil Palm Governance : Challenges of Sustainability Policy in Indonesia

Nowadays, Indonesian palm oil faces agrarian, environmental, and social issues and has been subject to sharp criticism from the international community for many years. To answer this problem, the Indonesian government implemented a strategy through certification which ensured the achievement of sustainability standards, especially on the upstream side of the palm oil supply chain. The implementation of Indonesian Sustainable Palm Oil (ISPO) was an ultimate instrument that applied in particular to smallholders oriented towards managing land legal issues, plantation business licenses, plant seeds, and environmental management and to farmer organizations at the local level. However, this process faced quite complex challenges in the form of structural barriers that are very constraining. This study revealed the occurrence of the phenomenon of hollow governance when regulations are absent or collide with each other. The study also revealed institutional power and multi-level governance that made the governance process ineffective or counterproductive. With a qualitative approach to research conducted in three important palm oil provinces of Indonesia, this article aims to look at the issues of oil palm governance a bit more comprehensively. The study conceptualized what was referred to as low-functioning governance to describe how weak the institutions, organizations, actors, and resources are that support ISPO implementation, especially at the regional and local levels. This paper suggests improving and strengthening the ISPO oil palm governance if Indonesian palm oil companies and smallholders want to gain better credibility on sustainability abroad