Hereby I would like to share my compilations with regards to key problems in the Indonesian palm oil industry: laws, land acquisition and certification for your perusal. This is based on Sawit Watch’s experiences and documentations since 1998:

1. Land acquisition problems in Indonesia
2. Lack of security for indigenous peoples
3. Lack of Free, Prior and Informed Consent
4. The Controlling Power of the State: limiting ‘eminent domain’
5. Land disputes and human rights abuses
6. Lack of enforcement capacity and weak governance
7. Vulnerable Groups: Women, bonded labour and children
8. HCV problems: identification, management and protection
9. Absence of rule of law
10. Problems facing smallholders
11. Food Sovereignty
12. Many oil palm operations still allow slavery like practices (worst labour conditions)

1. Land acquisition problems in Indonesia

In Indonesia, the process of land acquisition is complicated by a lack of recognition of customary rights in land, the lack of processes allowing free, prior and informed consent, the excessive application of the State’s power of eminent domain and a policy for the allocation of land concessions which ignore or override the rights and interests of other rights-holders. In theory based on spatial plans (though in practice in more arbitrary ways), lands and forests are allocated to companies as preliminary concessions (ijin lokasi) without consultation with other land users.1 Concessionaires, sometimes along with team’s from the land agency (BPN) and local government, are then expected to acquire lands from local communities (or may ignore local rights holders altogether). Once 51% of lands in the ijin lokasi have been acquired they may then convert their holding into a 35 year business use permit (Hak Guna Usaha – HGU). In these processes it is common for communities to lose control over huge areas of land in exchange for nugatory or no payments. Field studies of numerous concessions in four provinces show that communities are never informed that by relinquishing their lands to state-backed palm oil schemes they are permanently surrendering their lands, as under the Basic Agrarian Law at the expiry of the HGU the lands revert to the State and not to the original owners.


Ideally there should be no further investments in the palm oil sector in Indonesia and Sarawak, until there is a radical overhaul of the spatial planning processes to ensure that it does not legitimate forest clearance, peatland conversion and the theft of indigenous peoples’ lands. Likewise there should be a moratorium on any expansion of oil palm plantations until human rights abuses, land conflicts and debt bondage on existing plantations have been addressed.


2. Lack of security for indigenous peoples

In general Indigenous peoples suffer particularly from imposed legal systems, often derived from colonial legislation, which deny or limit indigenous peoples’ rights in land. State policies also commonly discriminate against indigenous peoples.

Indonesia: In Indonesia the term ‘indigenous peoples’ is commonly used to refer to those peoples who self-identify as masyarakat adat and is applied more generally to all those whose rights in land are defined by custom rather than by positive law. World Bank studies show that less that 40% of all land holdings in Indonesia are formally titled with the rest being held under informal or customary tenures. Since independence the Indonesian State has progressively dismantled customary institutions and pursued policies designed to integrate ‘isolated and alien peoples’ or ‘isolated communities’ into the national mainstream through resettlement, re-education and through the banning of traditional religions. Although the worst excesses of these policies have been attenuated since 1998, underlying laws and policies continue to severely limit indigenous peoples’ rights and customs.

Although customary rights are meant to be protected by the Constitution of the Republic of Indonesia, they are severely limited under the Forestry Law and Basic Agrarian Law (BAL). The BAL treats customary rights (hak ulayat) as weak usufructory rights on State lands which must give way to development projects. Likewise the Forestry Law defines ‘customary forests’ (hutan adat) as areas of State forest, which in turn are defined as ‘forests with no rights attached’. These laws pose formidable obstacles to indigenous peoples in the face of imposed palm oil schemes.

Sarawak: Malaysia has a plural legal regime, meaning that it accepts the simultaneous operation of distinct bodies of law, and custom is upheld under the Federal Constitution. Native authorities and courts are officially recognised in Sarawak and continue to administer community affairs and deliver local justice, meaning that custom is a living and active source of rights in Sarawak, both in law and in practice.

However, since the colonial period and progressively thereafter, through a series of laws and regulations, the Government of Sarawak has sought to limit the exercise of ‘Native Customary Rights’ in land, freezing their extension without permit and interpreting them as weakly secure use rights on State lands. Moreover, although the Government admits that some 1.5 to 2.8 million hectares of land are subject to ‘Native Customary Rights’, it has not revealed where such lands are, meaning that most communities are unsure whether or what part of their lands are recognised under the Government’s limited interpretation of their rights.

In a series of cases in the higher courts in Sarawak and Malaysia, judges have upheld native peoples’ land claims as consistent with the Malaysian Constitution and common law. These cases imply that the Government of Sarawak’s restrictive interpretation of ‘Native Customary Rights’ is incorrect. Consistent with international human rights law, the courts have accepted that indigenous peoples’ have rights in their lands on the basis of their customs and not as a result of grants by the State.


3. Free, Prior and Informed Consent

It is a principle of international law and an increasingly accepted principle of business best practice that indigenous peoples and local communities should have the right to give or withhold their free, prior and informed consent to projects planned on their lands. The RSPO P&C explicitly requires respect for this right.

In Indonesia, mechanisms for making effective the right to free, prior and informed consent are absent. Not only are the rights of indigenous peoples not recognised but their customary institutions lack legal personality. State-recognised village-level institutions commonly operate in ways that favour state control and are hindered from independently representing the interests of communities. It is also important to note that this failure by the Indonesian State to provide for respect to indigenous peoples’ rights is contrary to Indonesia’s obligations under international law.

In 2008, responding to civil society concerns about an Indonesian Government plan to create a 1.8 million hectare palm oil plantation along the Indonesian–Malaysian border, the UN Committee on the Elimination of Racial Discrimination has explicitly called on the Government of Indonesia to amend its laws to recognise indigenous peoples’ rights. Specifically, UN Committee on the Elimination of Racial Discrimination which oversees the application of the UN Convention on the Elimination of All Forms of Racial Discrimination to which the Republic of Indonesia is a signatory explicitly recommended that:

The State party should review its laws, in particular Law No. 18 of 2004 on Plantations, as well as the way they are interpreted and implemented in practice, to ensure that they respect the rights of indigenous peoples to possess, develop, control and use their communal lands. While noting that the Kalimantan Border Oil Palm Mega-project is being subjected to further studies, the Committee recommends that the State party secure the possession and ownership rights of local communities before proceeding further with this plan. The State party should also ensure that meaningful consultations are undertaken with the concerned communities, with a view to obtaining their consent and participation in it.2


4. The Controlling Power of the State: limiting ‘eminent domain’

In Indonesia, the constitution gives the State a controlling power over natural resources to allocate them for the benefit of the people. As repeated World Bank and other studies have confirmed, this power is exercised (or abused) so as to give the State almost unfettered power to ignore or extinguish community and indigenous peoples’ rights in land. It is frequently asserted that any project in the Government’s Five Year plans, or on lands allocated to such use through spatial planning or even that has acquired a business land use permit (HGU) is by definition State endorsed and thus in the national interest, meaning that local owners and rights-holders must give way in the face of such development plans.


5. Land disputes and human rights abuses:

General: Unfair processes of land use allocation and land acquisition and the lack of respect for local communities and indigenous peoples’ rights not only result in marginalization and impoverishment but also give rise to long term disputes over land, which all too often escalate into conflicts with concomitant human rights abuses due to repressive actions by company or State security forces.

Indonesia: At its latest count, the palm oil monitoring NGO, Sawit Watch, has through its own independent network of contacts identified 660 land disputes between palm oil companies and local communities in Indonesia. The actual number of disputes may be much higher than this. According to the Badan Pertanian Nasional (the National Land Bureau of Indonesia) in a presentation made to the RSPO in Kuala Lumpur on 1st November 2009, there are currently some 3,500 land disputes related to palm oil in Indonesia.

Sarawak: A review of local experiences with palm oil development in Sarawak shows that about a third of the 150 land disputes that are currently in the courts in the State concern oil palm. Many of these cases have been backed up in the courts for as long as 15 to 20 years. Although cases that have been brought to trial have often found in favour of indigenous plaintiffs and upheld their customary rights to their lands, the Government of Sarawak refuses to amend laws to better protect their rights. Likewise companies continue to dispute these rulings.

6. Vulnerable Groups: Women, bonded labour and children

According to the Indonesian Ministry of Women’s Empowerment, the impact of oil palm plantations on rural women can include (1) an increase in time and effort to carry out domestic chores through the loss of access to clean and adequate water and fuel wood and an increase in medical costs due to loss of access to medicinal plants obtained from gardens and forests. (2) loss of food and income from home gardens and cropping areas; (3) loss of indigenous knowledge and socio-cultural systems; and (4) an increase in domestic violence against women and children due to increased social and economic stresses.

There are a number of particularly vulnerable groups associated with the oil palm sector:

· It is estimated that there are between 40,000 and 50,000 stateless children of migrant workers in the plantations of Sarawak and Sabah4.

· Wives and children of plantation workers help their husbands and fathers to reach production targets or fulfil production obligations arising from sanctions, however their labours are not recognised and they have no workers benefits or insurance.

· There are cases of human trafficking of women forced to work in prostitution and sexual exploitation associated with oil palm plantations.

· Poverty and criminalisation is also associated with the oil palm sector in cases where individuals who lost access to land and livelihoods are criminalised for taking fallen fruit from plantations.

7. HCV problems

Indonesia: A recent study has shown that RSPO member companies operating in Indonesia are failing to secure HCV areas identified within their concessions because unplanted HCV areas within their concessions are being re-allocated by local officials to other companies for clearance and / or RSPO member companies are routinely handing back HCV areas to government, which lacks any laws and procedures for then protecting them.5 The study showed that without legal and procedural reform the RSPO standard would be ineffective in protecting HCVs in Indonesia. In November 2010, the RSPO Board convened an RSPO Ad Hoc Working Group on HCVs in Indonesia with the mandate of exploring possible legal reforms to secure HCV areas through multi-stakeholder engagement.


8. Lack of enforcement capacity and weak governance:

Laws and regulations do exist in Indonesia designed to protect the environment and to prevent illegal forest clearance and use of fire, to protect riparian areas and which oblige companies to carry out environmental impact assessments and implement mitigation actions. However field reviews show persistent violations of these laws and procedures by palm oil companies including by RSPO member companies seeking certification.6 Such abuses commonly include (inter alia):

· illegal use of fire to clear forest

· illegal forest clearance prior to receiving permits

· commencement of clearance and planting prior to completion and/ or acceptance of EIAs (AMDAL)

· opening up of estates without authorisation (HGU)

· illegal clearance of riparian areas

· illegal planting on areas of deep peat

· clearance of forests and planting of oil palms outside concession areas

· failure to pay taxes

· failures to compensate titled land owners or customary rights holders

· failure to allocate lands to smallholders.7


9. Absence of rule of law:

A major concern in many countries is that even where there are laws that protect rights and the environment, communities and NGOs are unable to challenge State agencies and private companies because of an absence of access to justice.

This problem is particularly acute in Indonesia where repeated independent assessments, including by the World Bank, and also by Indonesian government agencies, have documented serious problems with the judicial and criminal justice procedures in Indonesia. Not only is there is serious lack of independence in the judiciary but there is widespread evidence of corruption. Recent studies have drawn particular attention to the problem of ‘Politically Exposed Persons’ who abuse their office for private gain. In this context, communities and indigenous peoples suffering abuse of their rights and takeover of their lands by oil palm companies are denied legal remedies.


10. Problems facing smallholders:

General: National oil palm development policies have typically favoured the establishment of large plantations and, even where policies are in theory scale neutral, economies of scale typically favour domination of the sector by large scale estates and mills. Even where smallholdings have been promoted as part of palm oil development plans, they are often disadvantaged in relation to mills and large estates. Moreover, the fact that oil palm fruits have to be processed within 48 hours of ripening to achieve a good yield severely limits the independent marketing options of smallholders.

The situation of smallholders in Indonesia has been shown to be especially problematic. According to several field surveys as well as the testimony of farmers at numerous RSPO meetings, smallholders in Indonesia suffer from:

· monopsonistic relations with local mills

· unfair allocation of smallholdings

· untransparent processes of land titling

· high and manipulated debts

· unfair pricing

· debt peonage.


Recent studies show growing disparities between rich and poor in smallholder areas especially in Sumatra.8

11. Food Sovereignty:

General: The UN Special Rapporteur on the Right to Food has expressed concerns that the expansion of biofuels poses a major risk to food security.

Indonesia: At a special meeting of the UN Special Rapporteur on the Right to Food held in Kuala Lumpur in March 2010, the expansion of oil palm in Indonesia for the export of edible oils and for the production of biofuels was the focus of several submissions. There is growing concern in Indonesia that oil palm crops are expanding at the cost of food security, are displacing local subsistence and cash crops, thereby weakening food sovereignty and are contributing to rising food prices.

12. Many oil palm operations still allow slavery like practices (worst labour conditions)

In October 2010, Sawit Watch has recently recorded bad working conditions which leads to slavery-like conditions in particular East Kalimantan. In such situations local oversight body has done mainly industrial dispute between workers and plantation companies when cases were reported. On the other hand, many cases were unrecorded due to the facts that many plantation operations are far away situated in remote and untouched areas. Therefore, without neglecting the oversight role of provincial and district government officers, unnecessary and unwise exploitative must not be happening in the future.

There were worst working conditions recorded, it is almost led to slavery-like practices including physically harsh actions and tortures, intimidations, unpaid wages but trapped in indebtedness, under-age and children exploitation, non-transparent working contract and agreements, inhumane field installed barracks, substandard facilities, improper foods, minimal clean and safe drinking water, unpaid overtimes, unjustified working targets, dangerous and risky working conditions, pesticides spraying and chemical application works without appropriate protective measures, etc. amongst some identified and recorded prevalent daily conditions. Those conditions were seemingly known by tolerated local police officers since they always return the workers back to the plantation companies and/or contractors when the workers found ran away from the plantation operation sites.

Concluding remarks

Sustainable palm oil must at least, inter alia fulfill the following:


· comply with applicable national laws, including host country obligations under international law;

· carry out and implement comprehensive social and environmental impact assessments;

· avoid any forced resettlement;

· acquire land through due process and through negotiated agreements;

· avoid land conflicts and resolve outstanding ones;

· respect indigenous peoples’ rights;

· foster good faith negotiations with them and ensure free, prior and informed consultations; and develop an indigenous peoples’ development plan;

· pay special attention to threatened habitats, species and ecosystems and avoid conversion of critical habitats.

1 For more detailed explanations of the permitting procedures see ‘Promised Land’ and Marcus Colchester, Patrick Anderson, Norman Jiwan, Andiko and Su Mei Toh, 2009, HCV and the RSPO: report of an independent investigation into the effectiveness of the application of High Conservation Value zoning in palm oil development in Indonesia. Forest Peoples Programme, HuMA, SawitWatch and Wils Asia, Moreton-in-Marsh.

2 UN Doc. CERD/C/IDN/CO/3 15th August 2007.

3 Ibid.

4 (Norman will check with Tenaganita for reference)

5 Marcus Colchester, Patrick Anderson, Norman Jiwan, Andiko and Su Mei Toh, 2009, HCV and the RSPO: report of an independent investigation into the effectiveness of the application of High Conservation Value zoning in palm oil development in Indonesia. Forest Peoples Programme, HuMA, SawitWatch and Wils Asia, Moreton-in-Marsh.

6 For example see: Milieudefensie, Lembaga Gemawan and KONTAK Rakyat Borneo, 2007, Policy, Practice, Pride and Prejudice: review of legal, environmental and social practices of oil palm plantation companies of the Wilmar Group in Sambas District, West Kalimantan (Indonesia), Milieudefensie (Friends of the Earth Netherlands), Amsterdam.

7 See also: John McCarthy and Zahari Zen, 2010, Regulating the Oil Palm Boom: Assessing the Effectiveness of Environmental Governance Approaches to Agro-industrial Pollution in Indonesia, Law and Policy 32(1):153-179.


8 http://news.bbc.co.uk/2/hi/asia-pacific/8534031.stm



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