PROGRESS (Palangkaraya Ecological and Human Rights Studies)

OIL PALM PLANTATION AND PROCESSING INDUSTRY IN CENTRAL KALIMANTAN

Palm oil is a major commodity for economic growth at the regional and national level. In 2019, oil palm ( plantation subsector ) has contributed 3.27% or Rp. 517 trillion of the national GDP ( Gross Domestic Product ) of Rp.15,833 trillion. As an illustration, during the period 2016 – 2018, the country’s foreign exchange receipts from the palm oil sector increased by 10% from Rp. 260 trillion to Rp. 289 trillion. Meanwhile, in Central Kalimantan, the largest contribution of GDP (Gross Regional Domestic Product) from agriculture, forestry, and fisheries reached 19.86% in 2018.

The development of plantations and palm oil processing industry in Central Kalimantan was developed in the western part (zone 1) covering 5 districts, namely West Kotawaringin, East Kotawaringin, Seruyan, Lamandau, and Sukamara. East Kotawaringin regency is an area that has the largest area of oil palm plantations with a total of 425,136 hectares followed by Seruyan district with an area of 339,115 hectares. In 2019 the area of oil palm plantations in Central Kalimantan was recorded at 1.6 million hectares spread across all districts/ cities. Meanwhile, the number of large companies / PBS recorded 183 pieces, both operational and not yet operational.

The agricultural (plantation), forestry, and fishery sectors are the largest contributors to the Central Kalimantan PDRB and accommodate a large workforce. However, the processing industry is in no way related to the processing of agricultural, forestry, and fishery products. Based on existing data, the processing industry that developed in Central Kalimantan is a type of small business, household industry, and medium-sized industry that includes food, clothing, handicraft, and timber industries. In 2015, the contribution of the processing industry is relatively small to the Central Kalimantan PDRB of about 16,15 percent and only accommodates a workforce of 3.55 percent. This situation gives an idea that the agricultural sector (in a broad sense) with the existing processing industry has no direct relationship.

The rapidly growing development of crude palm oil (CPO) processing industry in Central Kalimantan must be accompanied by the development of vegetable energy industry type biodiesel, cosmetics or other foodstuffs in Central Kalimantan. Similarly, the development of rubber, coffee, cocoa, and pepper processing industries. The development of a processing industry that is integrated with all products originating from the agricultural, forestry, and fishery sectors will provide a significant increase in the economy and regional income.

In addition, subsectors of oil palm plantations in Central Kalimantan (especially those within Zone 1–western regions) must commit to producing palm oil that is clean from social and environmental conflicts. This is intended to realize the pattern of sustainable development as part of the implementation of the National Long-Medium Term Development Plan (RPJMN) and the implementation of NDPE (No Deforestation, No Peat, No Exploitation) commitments.

COMPLIANCE WITH NDPE ( NO DEFORESTATION, NO PEAT, NO EXPLOITATION ) COMMITMENT IS THE BASIS FOR FAIR AND SUSTAINABLE PALM OIL PLANTATION DEVELOPMENT

One of the government’s priority programs in RPJMN is to increase the supply of biofuels (BBN) as new and renewable energy (EBT) to overcome the fossil fuel (petroleum) crisis. The use of biodiesel-type biofuels developed from palm oil plantation commodities can reduce imports of petroleum (fossil fuels) and play a role in environmental conservation. According to the Ministry of Energy and Mineral Resources in 2020, the use of BBN through the use of B30 (30 percent biodiesel and 70 percent diesel) which is still limited to the transportation sector was able to save foreign exchange up to Rp. 63 trillion and reduce dependence on fuel (fossil).

The production and use of BBN-biodiesel in Indonesia is still experiencing limitations related to production costs that are more expensive than petroleum energy production. To overcome this, the government subsidizes biodiesel-type biofuel suppliers to Pertamina. Based on The Ministry of Energy and Mineral Resources No.195 K/10/MEM/2020 dated October 8, 2020, there are 18 companies supplying BBN-biodiesel to Pertamina for B30 production. Wilmar Group is the largest supplier company through its three subsidiaries, namely PT Wilmar Nabati Indonesia, PT Wilmar Bioenergi Indonesia, and PT Multi Nabati Sulawesi. Here is the list of biodiesel supplier companies:

No. Name of Biodiesel Type Biofuel Business Entity Factory Location Volume Allocation (kL/Period) Affiliate Business Group
1 PT Cemerlang Energi Perkasa Dumai, Riau 492.669 Asian Agri/Apical
2 PT Wilmar Bioenergi Indonesia Dumai, Riau 1.098.269 Wilmar
3 PT Pelita Agung Agrindustri Bengkalis. Riau 207.461 Permata Hijau
4 PT Ciliandra Perkasa Dumai, Riau 276.853 First Resources
5 PT Darmex Biofuels Bekasi, West Java 252.303 Duta Palma
6 PT Musim Mas Batam, Riau dan Deli Serdang, NorthSumatera 992.589 Musim Mas
7 PT Wilmar Nabati Indonesia Gresik, East Java 1.343.103 Wilmar Nabati Indonesia
8 PT Bayas Biofuels Indragiri Hilir, Riau 746.066 Duta Palma
9 PT LDC Indonesia Panjang, Bandar Lampung 237.178 LDC
10 PT SMART Tbk Kotabaru, South Kalimantan 25.064 Sinar Mas
11 PT Tunas Baru Lampung Panjang, Bandar Lampung 341.890 Tunas Baru Lampung
12 PT Multi Nabati Sulawesi Bitung, North Sulawesi 285.616 Wilmar
13 PT Permata Hijau Palm Oleo Medan Belawan, Medan 417.164 Permata Hijau
14 PT Intibenua Perkasatama Dumai, Riau 353.957 Musim Mas
15 PT Batara Elok Semesta Terpadu Gresik, East Java 185.621 BEST
16 PT Sinar Mas Bio Energy Bekasi, West Java 345.664 Sinar Mas
17 PT Kutai Refinery Nusantara Balikpapan, East Kalimantan 197.131  
18 PT Sukajadi Sawit Mekar East Kotawaringin, Central Kalimantan 285.326  
Total Allocation of BBN Biodiesel Volume at PT Pertamina 8.023.984  
           

Subsidies provided to large-scale palm oil plantation companies (PBS) above come from sawit funds collected by the government from plantation businesses as a cost for the export of palm oil plantation commodities and /or derivatives of palm oil plantation commodities. The funds were collected by the Ministry of Finance through the Palm Oil Plantation Fund Management Agency (BPDPKS) established in 2015. The allocation of palm funds is used to help PBS which supplies biodiesel to Pertamina and the rejuvenation of palm oil. However, aspects of palm oil rejuvenation are much neglected by BPDPKS. In its report in 2016, BPDPKS stated that the total palm oil fund for subsidies amounted to Rp 8.18 trillion, or about 70 percent of the total funds raised.

In addition to the issue of the large subsidy of palm funds, the fundamental problem that needs to be addressed is ensuring that biodiesel produced is fully clean from social conflict, environmental destruction and respect for human rights. This commitment is stated in the principles of NDPE (No Deforestation, No Peat, No Exploitation-No Deforestation, No Palm Planting in Peatlands, and No Exploitation and respect for human rights) that must be carried out by bio-diesel supply companies.

HERE ARE NDPE COMPLIANCE INDICATORS FOR PALM OIL PLANTATION COMPANIES

No Deforestation No Peat Development No Exploitation
Do not use forests and land that have high conservation values (HCVs);Do not use forests and land that have High Carbon Stock (HCS);Do not burn forests and land;Progressively reduce greenhouse gas (GRK) emissions and;Have legal documents on land owned by the company such as AMDAL/UKL-UPL/RKL RPL, HGU certificate. • Do not open land on peatlands of any depth; • Conduct good management practices for land that already operates on peatland and; Conducting peatland restoration. Do not violate land rights under the law and ulayat;Does not violate land acquisition processes and procedures;Do not violate the procedures of smallholders scheme (plasma farmers);Does not violate the rights of indigenous peoples, in particular their right to give or withdraw Consent on the Basis of Information at the Beginning Without Coercion (Padiatapa);Does not violate workers’ rights and;Resolve all complaints and conflicts through an open, transparent and consultative process.

BASED ON ITS DEVELOPMENT, THERE ARE OIL PALM PLANTATION COMPANIES THAT HAVE AND HAVE NOT ADOPTED THE NDPE COMMITMENT.

No Group NDPE
1 APICAL/Asian Agri YES
2 BEST Group (Batara Elok Semesta Terpadu) NO
3 Duta Palma NO
4 First Resources YES
5 GAR YES
6 LDC YES
7 Musim Mas YES
8 Permata Hijau Group YES
9 TBLA Group (Tunas Baru Lampung) NO
10 Wilmar International YES

Compliance with NDPE’s commitment is the benchmark for assessment of palm oil products that are environmentally friendly and clean from social conflicts. NDPE’s commitment can also be used by the Central Kalimantan government to encourage palm oil companies to realize fair and sustainable development.

The Regional Government of Central Kalimantan Province is expected to implement the following recommendations aimed at building a sector of oil palm plantations that are fair to the people and socially and environmentally sustainable in Central Kalimantan Province, especially for areas within the zone of plantation development and palm oil processing, namely Seruyan Regency, Lamandau Regency, West Kotawaringin Regency, East Kotawaringin Regency , and Sukamara Regency.

RECOMMENDATIONS

  1. Develop processing industries related to agriculture, forestry, and fisheries (especially the palm oil processing industry for the benefit of vegetable energy, food, and chemicals) within the zone of plantation development and palm oil processing as mandated in the Central Kalimantan Provincial Regulation No. 5 of 2015 concerning Spatial Plan of Central Kalimantan Province year 2015 – 2035.
  2. The development of plantations and palm oil processing industry must bring a new paradigm of sustainable development that upholds justice for the community and the environment. In a clean sense of social and environmentally friendly conflict.
  3. Request that all oil palm plantation and processing companies operating in Central Kalimantan immediately adopt the commitment of NDPE (No Deforestation, No Peat Development, and No Exploitation) as a basic instrument for palm oil processing companies committed to clean from social and environmental conflicts.
  4. Encourage openness and traceability to companies that have adopted NDPE’s commitment to ensure the production process of biodiesel-type biofuels can be fully in accordance with NDPE principles in protecting the environment, fulfilling the rights of palm oil workers, and respecting people’s rights to their land.
  5. Local governments open opportunities to community participation to provide advice and recommendations for the development of biodiesel-type biofuels based on the principles of fairness, sustainability, and environmental insight in order to create national energy independence and security, as mandated by Law No. 30 of 2007 on Energy.

 

Palangkaraya Ecological and Human Rights Studies (PROGRESS) is a non-profit organization focused on Research, Campaign, and Advocacy about nature and Human Rights, with the purpose to uphold the cultur, indigenous local wisdom and local communication as well as Gender problem in Central Kalimantan.

Leave a Reply

Your email address will not be published. Required fields are marked *