- President Prabowo’s new regulation on ISPO will broaden and strengthen sustainability requirements, encompassing downstream industries;
- The revisions can also be oriented towards accelerating certification for smallholders;
- Farmers can receive financial support from government and other sources – providing an opportunity for the EU to support farmers directly.
Indonesia has taken new action to strengthen its position as a global leader in sustainable palm oil production. In March, President Prabowo issued a new Presidential Regulation that represents an expansion of Indonesia’s approach to palm oil sustainability.
Extending on Jokowi-era regulations, the new decree expands certification requirements to cover the entire palm oil value chain—from upstream plantations to downstream processing industries and bioenergy producers.
Butthe most significant development is new support for smallholder farmers, who manage approximately 6.94 million hectares of palm oil plantations across Indonesia.
The government has introduced a comprehensive funding mechanism where Indonesia’s Palm Oil Plantation Fund Management Agency (BPDPKS), along with national and regional budgets, will now cover certification costs for smallholders. This funding extends to costs for business registrations, training, technical assistance and certification and inspection fees. Mandatory certification for smallholders still won’t take effect until 2029.
The expanded ISPO framework has received mixed reactions from smallholders. Sawitku Masa Depanku (Samade), a farmers’ association, has voiced support for the regulation, welcoming the new financing opportunities.
However, APKASINDO (Indonesian Oil Palm Farmers Association) has raised questions about requiring downstream certification when upstream operations are already certified.
The revisions and new funding sources should set conditions to accelerate ISPO certification across Indonesia for smallholders in the lead-up to 2029. This has been a crucial point made in stakeholder consultations that took place across Indonesia last week.
MSPO, Malaysia’s national mandatory certification scheme, provides significant financial support for smallholders, with around 80 per cent of smallholders already certified.
GAPKI, the Indonesian Palm Oil Association, is hopeful that the new revised regulations will provide additional support for secretariat functions for ISPO in order to ensure certification processes take place efficiently.
The new scope also provides an opportunity for aid agencies and particularly the European Union to provide additional financial support for certification, particularly so smallholder farmers can comply with the requirements of the European Union Deforestation Regulation (EUDR).
The costs of legality and traceability requirements for smallholders will likely exclude smallholders – particularly independent smallholders – from supplying EU markets once the regulation takes effect.
On broadening the scope of ISPO downstream, there’s a new opportunity for Indonesia’s massive derivatives industry to market itself as sustainable – moving beyond crude palm oil.
This has been a significant gap in ISPO up until this point. The standards effectively certified agricultural practices, but the certification of processing and refining – and consequently chain of custody and traceability – was off the table.
Indonesia currently produces 190 types of palm oil derivatives, though certification will initially focus on high-volume, high-market-potential products. Certified products will feature the ISPO logo on packaging, providing clear sustainability credentials to international buyers and consumers.
Ministry of Industry’s Director of Oleochemicals and Feed Lila Harsyah Bakhtiar says that:
“ISPO certification serves as written proof that palm plantations are managed sustainably … Downstream ISPO certification will act like a halal label, giving consumers confidence that the product is sustainable.”
As implementation progresses, all eyes will be on Indonesia’s ability to translate ambitious policy into tangible results on the ground—particularly in achieving the challenging goal of certifying millions of smallholder farmers by 2029.