Indonesia won’t revoke existing forestry licenses for palm oil firms as part of a deal with Norway to preserve rain forests, a government minister and industry official said on Wednesday.
Chief Economic Minister Hatta Rajasa told reporters that the government had no intention of limiting the expansion of the $15-billion Indonesian palm oil industry, although it was committed to slowing deforestation.
“We want to keep to our targets of 40 million tonnes of crude palm oil,” he said on the sidelines of an industry conference in Java. “We will not take away the existing licenses.”
The country plans to produce 21-23 million tonnes of palm oil this year.
“We have food security interests and our export earnings to protect but expansion will be at a sustainable pace for our future generations,” Rajasa added.
A two-year commitment to halt new concessions to the industry for the conversion of rainforests and peatlands will go on as planned under the Norwegian deal signed last week, Indonesian Palm Oil Board Vice Chairman Derom Bangun said.
“The government has assured us that the expansion of oil palm estates will continue within reasonable limits,” Bangun told Reuters.
A government official had previously said Indonesia could revoke licenses, and would provide compensation and degraded land in exchange, prompting planters to say that such a move would put their investments in jeopardy.
Leaving existing licenses untouched would allow top planters like Singapore-listed Wilmar and Malaysia’s Sime Darby to continue developing concessions and keep up with global demand for the vegetable oil used in chocolates, cooking oil and biofuels.
FOOD, REVENUES AND ENVIRONMENT
Indonesia has vast tracts of rainforests and peatlands that have been rapidly converted into oil palm estates, pushing the Southeast Asian country ahead of Malaysia as the world’s top palm oil producer.
Green groups and governments contend that climate change can be slowed if Indonesia’s forests, which soak up global warming gases like carbon dioxide, are preserved.
Indonesia has pledged to cut emissions by 41 percent by 2020 if it gets foreign funding and other assistance or by 26 percent if it does not.
Norway’s $1-billion contribution to forest conservation projects in Indonesia is contingent on the Southeast Asian country proving that it can curb the rate of deforestation and therefore reduce the amount of greenhouse gas emissions.
Most of the funds will be spent on preparing for and implementing pilot projects under a U.N.-backed forest preservation scheme called reducing emissions from deforestation and degradation (REDD).
REDD allows developing nations to earn money by not chopping down their forests or through replanting cleared or degraded forests.
On Tuesday, an Indonesian government official said the palm oil industry could still grow via acquisitions of six million hectares of degraded land across the archipelago.
