BALANCING AGENDAS: a Governmnet perspective on implementing “Zero Deforestation” commitments Prabianto Mukti Wibowo Coordinating Ministry for Economic Affairs Republic of Indonesia ANNUAL WORLD BANK CONFERENCE ON LAND AND POVERTY MARCH 24 - 27, 2015 WASHINGTON, DC

AREA OF PALM OIL PLANTATION NO YEAR AREA (Ha) Smallholders % Private TOTAL 1 1980 6.175 2 288.385 98 294.560 100 1990 291.338 26 835.339 74 1.126.677 3 2000 1.166.758 28 2.991.319 72 4.158.077 4 2010 3.387.257 40 4.998.137 60 8.385.394 5 2011 3.752.480 42 5240344 58 8.992.824 6 2012 4.137.620 43 5.435.095 57 9.572.715 7 2013 4.356.087 6.108.933 10.465.020 8 2014*) 4.551.854 6.404.377 10.956.231 I have highlighted the latets figures percentages with a red circle *) Prelimenary data Source: Ministry of Agriculture, 2014

PRODUCTION OF CPO NO YEAR PRODUCTION (Ton) Smallholders % Private   YEAR PRODUCTION (Ton) Smallholders % Private TOTAL 1 1980 770 0,11 720.402 99,89 721.172 100 2 1990 376.950 15,62 2.035.662 84,38 2.412.612 3 2000 1.905.653 27,22 5.094.855 72,78 7.000.508 4 2010 8.458.709 38,52 13.499.410 61,48 21.958.119 5 2011 8.797.924 38,09 14.298.617 61,91 23.096.541 100  6 2012 9.197.728 35,35 16.817.790 64,65 26.015.518 7 2013 10.010.728 36,03 17.771.276 63,97 27.782.004  100 8 2014*) 10.683.286 36,4 18.661.193 63,59 29.344.479 Worth noting here, the difference in CPO productivity between smallholders and private firms – their yields are somewhat lower (compared to the almost 50/50 split on hectarage) *) Prelimenary data Source: Ministry of Agriculture, 2014

EXPORTS OF PALM OIL BY MAJOR COUNTRIES OF DESTINATION ( Net Weight in '000 Ton) Country of Destination 2010 2011 2012 2013 China 2.174,4 2.032,8 2.842,1 2.343,4 Singapore 696,8 737,2 952,1 844,0 Malaysia 1.489,7 1.532,6 1.412,3 514,3 India 5.290,9 4.980,0 5.253,8 5.634,1 Pakistan 90,3 279,2 749,1 1.080,3 Bangladesh 771,2 804,9 743,5 655,4 Sri Lanka 12,7 25,4 10,8 29,4 Egypt 488,7 790,7 494,1 735,5 Netherlands 1.197,3 873,0 1.358,3 1.361,4 Germany 379,3 263,6 219,5 283,1 Others 3.700,6 4.116,8 4.809,4 7.097,1 TOTAL 16.291,9 16.436,2 18.845,0 20.578,0 Worth noting that Asia dominates as a market which presents a challenge for market demand for Zero deforestation palm oil Source: Statistics Indonesia, 2014

PALM OIL CONTRIBUTION TO ECONOMY Export the largest agricultural exports and its most valuable non-oil and gas export. generated about $15.8 billion in foreign exchange. Employment absorbed about 5 million workers (at least 15 million people are directly affected by oil palm related employment). provides more jobs per hectare than other large scale farming (it employs about 0.4 people per hectare), and the jobs are year-round rather than seasonal. Rural Development local infrastuctures : road, electricity, school, economy activities, etc. Poverty alleviation The role of palm oil industry in lifting people out of poverty is significant.

PALM OIL PLANTATION AND DEFORESTATION Source: Ministry of Forestry, 2014

Palm oil plantation and deforestation Source: Ministry of Forestry, 2014

Decreasing trends of forest conversion? Source: Ministry of Forestry, 2014

Current Government interventions The government of Indonesia has taken steps to ensure sustainability: Government Regulation 71/2014 on the protection and management of peat land. Presidential Decree No. 6/2013 on the moratorium on issuing new licenses in primary natural forests and peat land. Presidential Decree No. 62/2013 on the establishment of REDD+ National Agency. Regulation of Ministry of Agriculture No. 19/2011 on the Indonesian Sustainable Palm Oil (ISPO) standard. Regulation of Ministry of Forestry No. 43/2014, regarding Sustainable Production Forest Management and Timber Legality Verification Standards. Those regulations and standards have some form of prohibition on the clearing of forests and other natural ecosystems including maintenance and enhancement of high conservation values forests (HCV), legal compliance, protection of peat land, and respect for local and indigenous people’s rights to give or withhold free, prior, and informed consent (FPIC). Is there reference to HCV in Indonesian regulations?

Potential negative impacts and implementation challenges Lack of clarity on concept and implementation: What is the scope of deforestation-free commitments? Is absolutely no conversion of forestland allowed? or is conversion possible within certain bounds? Is it a stand alone objective or as a component of existing instruments to combat deforestation? Oil palm smallholders may be marginalized by escalating costs and loss of market access for palm oil products. How do we include smallholders and who will bare the cost? How do we involve other stakeholders (producers and local governments)? What are the incentives? Driven by European buyers – trade discrimination? More negative rather than positive perception.

THE WAY FORWARD: toward greater collective responsibility Zero-deforestation committments should not be a trade barrier. Deforestation is all about governance issues and effective implementation. To improve governance, Indonesia is looking for integrated landscape management (ILM) for long-term economic, social and ecological sustainability: Completing spatial plans at national and sub-national under Law 26/2007 Spatial Planning Act Moving into one land administration solution --- establishment of Ministry of Agraria and Land-use Plan One Map policy Can Zero deforestation commitments help to provide momentum, leverage change and effectively implement these initiatives?

THANK YOU FOR YOUR KIND ATTENTION