A New Era for Indonesian Sustainable Palm Oil

After a period of anticipation, Indonesia’s commitment to sustainable palm oil production has been solidified with the enactment of Presidential Regulation Number 16 of 2025, signed by President Prabowo Subianto on March 19, 2025. This revised Indonesian Sustainable Palm Oil (ISPO) policy marks a notable step forward, superseding Presidential Regulation No. 44 of 2020 and ushering in a more thorough and stringent framework for the industry.

Expanding the Scope of Sustainability

The updated ISPO policy broadens its reach to encompass the entire palm oil value chain. Previously focused primarily on plantations, the new regulations, as detailed in Article 2, now extend to:

• Oil palm plantation businesses
• Downstream palm oil industries
• Bioenergy businesses derived from oil palm

This holistic approach ensures that sustainability standards are applied from cultivation to processing and energy production, reflecting a commitment to responsible practices across the sector. This expansion is crucial, considering the increasing global demand for sustainable products and the pressure on Indonesia to demonstrate responsible palm oil production. Such as,the European Union’s Deforestation Regulation (EUDR) is pushing producers to ensure their products are not linked to deforestation.

Enforcement and Incentives: Balancing Regulation and Support

The Indonesian government is serious about enforcing the new ISPO standards. Article 5 outlines a tiered system of sanctions for non-compliance, ranging from written warnings and administrative fines to the temporary suspension of business operations. The specific ministry responsible for enforcement—Plantation, Industry, or Energy—will depend on the sector involved.

Recognizing the diverse financial capabilities within the industry, notably among smallholder farmers, Article 16 addresses the costs associated with ISPO certification. While businesses are generally responsible for covering these expenses, the government offers alternative funding options for smallholder farmers, including access to oil palm funds, national and regional budgets (APBN/APBD), and other legitimate sources. This support aims to ensure that smallholder farmers can participate in the ISPO scheme and remain competitive in the market. Currently, smallholders account for approximately 40% of Indonesia’s palm oil production, making their inclusion vital for the success of the ISPO program.

Revoking the Old, Embracing the New

To ensure clarity and avoid ambiguity, Article 28 explicitly revokes Presidential Regulation No.44 of 2020. However, existing derivative regulations may remain in effect as long as they do not contradict the new ISPO provisions, providing a degree of continuity during the transition.

A Vision for Sustainable Palm Oil

The revised ISPO policy represents more than just a regulatory update; it embodies Indonesia’s vision for a sustainable palm oil industry. By implementing these comprehensive standards, Indonesia aims to demonstrate that palm oil production can be environmentally responsible and contribute to the country’s sustainable development goals. This initiative is crucial for maintaining market access and enhancing the reputation of Indonesian palm oil on the global stage.

The latest verso of ISPO is not just a technical regulation. It is part of a big narrative about how Indonesia wants to show that oil palm is not an environmental enemy,but can be a partner for sustainability – the USAL is managed properly.And through Prabowo’s signature, his new direction has now begun to be outlined.

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