The Palm Scribe

Observations on Presidential Regulation Number 44 of 2020 on ISPO

ISPO palm oil industry
Photo: EHP

The Indonesian Sustainable Palm Oil (ISPO) certification system has been implemented since the issuance of Regulation of the Agriculture Minister Number 19/Permentan/OT.140/3/2011 on the Guidelines for Indonesian Sustainable Palm Oil, which was later superseded by another Regulation of the Agriculture Ministry, Number 11/Permentan/OT.140/3/2015 on the Indonesian Sustainable Palm Oil Certification System.

Besides having attained a number of achievements and developments, the ISPO certification system also has had to face a number of hindrances, problems, challenges and demands. According to various studies and reference, the fact that Indonesia has applied the ISPO certification system has not halted demands for a sustainable palm oil coming from buyers, consumers, user industries and most vocally from non-governmental organizations, at the national, regional and international levels.

The crucial hindrances, problems, challenges and demands related to ISPO certification include the absence of a universally accepted understanding and policy on the concept of sustainability in Indonesia. A fundamental matter that has never been comprehensively discussed in the Indonesian context, is a common understanding about the definition and basic concept of sustainability in the management and development of palm oil.

The second problem is the institutional mechanism for the execution of ISPO certification. The fundamental problem with the institutional mechanism of the ISPO lays in an ISPO certification mechanism that some deem to not be transparent, with no accountability of its audits and final assessments as well as the length of time needed to decide whether or not to issue an ISPO certification.

The important role assigned to the ISPO Commission in the ISPO certification process, through the ISPO Secretariat that is under the Agriculture Ministry, is also often seen as posing a practical hindrance for both the players and the certification institution, which should have been an independent one.

The third problem concerns the substance, principle, criteria and indicators of the ISPO certification system. Some are claiming that ISPO is reflecting national interest but on the other hand, ISPO does not have the power to influence markets and consumers because it is instead seen as a local policy instrument and has weaknesses in its criteria. Its standards and criteria do not yet address weaknesses in permit management, supervision, inconsistency in policies, its low level of transparency and its continuing weak law enforcement.

In fourth place is the legality aspect as well as the financing of ISPO certification. The implementation of the ISPO certification has so far been seen as not being implemented to the fullest because of a number of factors, including, the legality requirements for applicants and the matter of costs.

Fifth is the matter of acceptance by the global market. Even though Indonesia is the world’s top palm oil producers, it continues to be the target of a number of negative issues blown up mainly by export destination countries for Indonesian palm oil.

Sixth, the ISPO certification system currently has a number of legal umbrellas, direct or indirectly. The one directly arranging ISPO is the Regulation of the Agriculture Minister Number 11/Permentan/OT.140/3/2015. Therefore, there are thoughts that the regulation that governs ISPO should be upgraded into a higher legislation, for example taking the form of a Presidential Regulation.

In an effort to overcome the crucial hindrances, problems, challenges and demands related to the ISPO certification system there has been an ongoing process of strengthening the ISPO certification system since 2016. After a lengthy process, the President of the Republic of Indonesia issued Presidential Regulation Number 44 of 2020 on the Certification System for Sustainable Palm Oil Plantation in Indonesia, later known as the Presidential Regulation on the ISPO Certification System, on March 13, 2020 which was later passed three days later on March 16, 2020.

This Presidential Regulation was issued based on a number of considerations, that palm oil plantations in Indonesia absorb a large number of manpower and contribute a sizeable amount of foreign exchange to the state. It therefore needed an effective, efficient fair and sustainable oil palm plantation management system to be able to support national economic development.

To ensure an oil palm plantation business that is viable socially, economically and environmentally in line with the prevailing regulations and laws, there was also a need to improve the implementation of the certification system of sustainable oil palm plantations in Indonesia.

Lastly, the laws governing the certification system for Sustainable Oil Palm Plantation in Indonesia is no longer in tune with international developments and the needs of the law so that it needed to be replaced and re-regulated with the Presidential Regulation.

A number of critical issues that want to be addressed by the Presidential Regulation onf the ISPO Certification System includes first, improving the ISPO certification management by opening it to public participation and improve accountability and transparency. Secondly, reordering the ISPO Commission institution, including in membership, tasks, functions and integrity. Thirdly, position the function of the National Accreditation Committee within the ISPO certification system. Fourthly, improving the standards and requirements of the ISPO certification. Fifthly, providing more attention on the issues of deforestation, peat land conversion and glasshouse gas emissions. Sixthly, building up a more credible independent monitoring mechanism.

The content of the Presidential Regulation is contained in Chapter VII, Article 30 which governs the matter of ISPO certification, institution, acceptance, market competitiveness, public participation, guidance and supervision and sanctions.

Article 3 of this Presidential Regulation stipulates that the implementation of the ISPO certification is aimed at: a.  ascertain and improve the management and development of oil palm plantations in line with the ISPO principles and criteria; b. improve acceptance of and competitiveness of the products of Indonesian oil palm plantations in both the national and international market; c. step up efforts to accelerate the reduction of glasshouse gas emission.

The Presidential Regulation that regulates ISPO Certification System contains a number of new and crucial arrangements, including:

  • the application of the ISPO certification system is mandatory for companies or farmers, although specifically for farmers it would only be applicable five years after the Presidential Regulation is passed.
  • the decision-making mechanism for ISPO certification will be made more accountable, transparent and meeting international standards for certification systems.
  • the reformulation of the principles and criteria of the ISPO.
  • the financing of ISPO certification, especially for farmers.
  • the institution of ISPO certification is composed of a Board of Directors, the ISPO Committee, the National Accreditation Committee, the ISPO certification Institute and oil palm plantation entrepreneurs.
  • the role of the government and other stakeholders in increasing market acceptance, nationally and internationally.
  • the participation of the public, entrepreneurs and other stakeholders in the management and implementation of the ISPO certification, among other through the involvement of Independent Monitors as one of the elements in the ISPO Committee.
  • the guidance on farmers in preparing for and meeting the principles and criteria of ISPO.

 

This Presidential Regulation also contains the transitional arrangement that even though it takes effects as of the date it was issued, ISPO certificates that had already been previously issued continue to remain valid under a number of requirements. And of no less importance, the executing regulations in the form of regulations of the agriculture minister, must be issued at the latest 30 (thirty) days from the date the Presidential Regulation was passed.

The passing of the Presidential Regulation on ISPO Certification System is hoped to be able to answer all questions, challenges and demands regarding the development of sustainable palm oil in Indonesia so that it will now have a stronger legal certainty, is fairer and more helpful. This would be in line with the mandate of Article 33 of the Constitution of the Republic of Indonesia and the other related laws and regulations.

 

By Dr. Ermanto Fahamsyah, S.H., M.H.

Permanent Lecturer, Law Faculty of Universitas Jember

General Secretary of the Forum for the Development of Strategic Sustainable Plantations (FP2SB)

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