The rise of palm oil factories without plantations, the government is asked to act firmly

JAKARTA – A number of groups asked the government to take action decisive action against the large number of palm oil factories popping up without plantations and without partnerships whose permits are given by regional heads. The presence of these factories often does not take into account the carrying capacity of the area and ignores regulations.

Responding to this, University Economics Expert Almasdi Syahza said the central government must be committed to implementing the regulations they make. Because, so far the problem has been the inconsistency of central regulations with regional implementation.

One of the problems is the proliferation of palm oil mills without plantations or mini mills that do not form partnerships as regulated in Minister of Agriculture Regulation Number 98 of 2013 concerning Guidelines for Plantation Business Licensing. This regulation stipulates that factories must have their own plantations, if they do not exist then factories are required to form partnerships with farmers to meet the 20% supply of raw materials.

Prof. Almasdi said that the issue of permits to establish palm oil mills must comply with applicable regulations. If not, it will be a problem in the future.

“In terms of considering the distance between mills, the existence of partnerships, and the carrying capacity of the area, of course this becomes a reference through a feasibility study for a palm oil mill (PKS). Unless the PKS is established without feasibility study documents and Amdal (environmental impact analysis), this poses a risk to licensing,” he said in his statement, Thursday (28/3/2024).

“If the granting of permits (for palm oil mills) is linked to political activities, it will certainly have an impact after the 2024 regional elections, for example, if they violate, political opponents will pursue them,” added Almasdi.

He emphasized that the presence of palm oil factories without plantations is clearly disrupting the existing palm oil trade system. For this reason, regional and central governments must be firm in implementing regulations.

“It’s clearly disturbing (palm oil factories without plantations) but it’s also the government’s fault. Why were permits given to palm oil mills without plantations? It must be acknowledged that this is one of the impacts of regional autonomy. The regents, not the central government, own the regions,” he explained.

Former Head of the Central Kalimantan Plantation Service, Rawing Rambang, explained that the government allows palm oil mills without established plantations but is required to establish partnerships with farmers. “With this partnership, palm oil mills can know the source of their palm fruit,” explained Rawing.