The Palm Scribe

KPK, Agriculture Ministry form palm oil special team

JAKARTA – The Corruption Eradication Commission (KPK) and the Agriculture Ministry are in agreement to establish a special team to overcome various problems facing the palm oil industry, including the overlapping concession rights, and corporate or people plantation encroaching into protected forest and conservation areas, Agriculture Minister Amran Sulaiman said on Thursday, (7/12/2017).

ILLUSTRATION. Plantation worker watches as a truck unloads freshly harvested oil palm fruit bunches at a collection point. ILLUSTRATION. Plantation worker watches as a truck unloads freshly harvested oil palm fruit bunches at a collection point.

“There are plasma (plantations) in production forest areas, there are company plantations, people’s plantations, We will look for the best solution for people, for palm oil farmers, for all of Indonesia,” Sulaiman said after meeting with the leaders of the KPK in Jakarta as reported by CNN.

The team according to the minister will also involve representatives from his ministry, that for the environment and forests and the ministry of agrarian affairs and spatial zoning.

KPK Spokesman Febri Diansyah said that his team will prepare a database of people’s plantation  and this will be useful in improving the channeling of government assistance to people’s palm oil plantations, and also to safeguard the implementation of social plantations and the land that is the object of agrarian reforms.

The minister said that the cooperation between the KPK and the state institutions is aimed at boosting the productivity of people’s palm oil plantations.

The meeting between the minister and the KPK was a follow up of an initial meeting in March 2017, that took place after the publication of the results of a KPK evaluation of the palm oil industry.

Based on that evaluation, palm oil was found to be a strategic commodity in Indonesia’s economy but unfortunately, its management was still the source of many problems. The week mechanism of permit issuance, supervision and control is making this sector prone to corrupt practices.

The corruption can take place in the issuance of the permit for palm oil plantations and this often involves the local leaders. As examples are the Buol district chief, Amran Batalipu and Riau Governor Rusli Zainal,  and both their case are now in the hands of the KPK.

Based on the research that was conducted in 2016, KPK found that so far there is no design for the management of palm oil plantation and industry that is integrated from upstream to downstream. This condution does not meet the principle of sustainable development, and thus has the potential of giving rise to corrupt actions.

On the upstream side, the system of controlling the issuance of permits for palm oil plantation is not yet accountable in ascertaining the compliance of the entrepreneurs. This is shown in the absence of a mechanism for the planning of permits based on special zoning.

The Integration of permit issuance into a the One Map Scheme is also not yet available. Ministries and related government institutions  are also not coordinating with each other in the issuance of the permits and therefore causes various overlaps that covers some 4,69 million hectares of palm oil  plantations.

Downstream, the control on palm oil export levies is not yet effective because the verification system is not yet running well The use of Palm oil Fund to subsidize biofuels is also deemed to be wrongly targeted because only three plantation business groups absorb 81.7 percent of the Rp 3.25 trillion in allocated funds.

The fund should have been also used to finance replanting, improve human resources, improve facilities and infrastructure, promotion, advocacy and research. The levying of the export levy itself by the tax office is also seen as not yet being optimal.

The inefficiency in controlling the export levy is leading to a shortage of Rp 2,1 billion as well as an overpayment of Rp 10.5 billion. The level of tax compliance, individual or corporate also has shown a weakening. The compliance, both of individuals and corporates went down by 24.3 percent and 36 percent respectively between 2011-2015.

From this study, KPK has recommended to the agriculture ministry nd related government institutions to prepare an action plan to improve the system of management of the palm oil commodity, KPK said it will conduct a monitoring and an evaluation on the implementation of that action plan.

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