Piloting jurisdictional public-private partnerships for legal and sustainable palm oil in Banyuasin District, South Sumatra

  • Year


  • Location

    Banyuasin District, South Sumatra, Indonesia

  • Partners

    WRI Indonesia

  • Budget

    EUR 110 000

  • Funded by

    EU REDD Facility


Indonesia’s Nationally Determined Contribution (NDC) under the Paris Agreement on climate change underscores the importance of adopting a landscape-scale and ecosystem management approach. It also emphasises the pivotal role played by subnational jurisdictions. In the vast and decentralised context of Indonesia, subnational governments, particularly at the district level, are poised to assume a key role in a comprehensive, jurisdictional approach to forest and land use. This approach will help reduce deforestation and improve the sustainability of commodity production.

Nonetheless, addressing barriers to legal and sustainable commodity production is complex and demands a multifaceted strategy. It not only entails strengthening the enabling environment within jurisdictions where commodities are cultivated, but also shifting incentive structures and enhancing transparency throughout supply chains. Consequently, the jurisdictional approach requires the involvement of a diverse set of stakeholders. The private sector, civil society, and vulnerable actors such as micro, small and medium-sized enterprises, as well as indigenous communities, all play indispensable roles in fortifying this approach. Their participation is instrumental in mitigating the risk of deforestation pressures cascading through supply chains and jurisdictions.

Crucially, collaboration between the public and private sectors stands as a foundation of the jurisdictional approach, to help curb deforestation stemming from the production and trade of forest-risk commodities. The EU REDD Facility seeks to empower district governments in Indonesia to take an active role in facilitating and catalysing private sector investments in sustainable production and trade of palm oil. This can be done through the facilitation of public-private partnerships (PPP) involving major buyers, traders and producers of forest-risk commodities at the jurisdictional level. The success of such PPP initiatives depends on their alignment with national and subnational strategies and their foundation on sound economic principles that yield clear, sustainable, socially responsible and long-term benefits for smallholder producers and local communities.

As part of such support, the EU REDD Facility is piloting the design, facilitation and implementation of a jurisdictional PPP approach together with WRI Indonesia and the district government in Banyuasin District, South Sumatra Province. The approach focuses on sustainable production and trade of palm oil, a key forest-risk commodity in the region.

The objective

This project aims to contribute to the design and implementation of a jurisdictional PPP to improve sustainability and legality of land-use and related oil palm production in Banyuasin District in South Sumatra Province, particularly by integrating some of the Facility’s participatory approaches and tools.

Multistakeholder meeting in Banyuasin, discussing the development of the Regional Action Plan on Sustainable Palm Oil and the integration of private palm oil companies and smallholders into the jurisdictional sustainability process.

The challenge

Various studies have reported that oil palm-related deforestation in Indonesia has been decreasing over the past decade, often attributed to regulatory reforms in the forestry and land-use sector. It has been noted that recent oil palm-related deforestation is increasingly driven by smallholder and mid-scale farmers. Low productivity levels of smallholder plantations and associated livelihood challenges are often cited as underlying reasons for continued forest clearance. These challenges should be addressed in tackling palm oil-driven deforestation and associated issues such as forest fires, two phenomena that are driving climate change.

In recent years, the rate of plantation expansion has levelled off and oil palm-driven deforestation has declined in Sumatra. However, the risk of deforestation remains in certain areas currently designated as conservation forest and protected forest, including within Banyuasin District. This district is home to the Sembilang National Park, a site dominated by mangrove and peat swamps that provides the habitat for one of the most complex shorebird communities in the world. The national park and its buffering areas are threatened by the expansion of oil palm and coconut croplands, as well as coastal fishpond activities.

Reducing the expansion of oil palm and accelerating the sustainability journey of palm oil production in Banyuasin are particularly important in the context of the EU Deforestation Regulation. Based on 2015 data, the EU was the top destination market for palm oil produced in 35 Indonesian districts, including Banyuasin. Preserving the carbon-rich peatlands and tackling the frequent forest and peatland fires is will contribute to Indonesia’s climate change targets.

Smallholders on an oil palm intercropping plantation, where oil palms and fruit trees are grown together.

The approach

The pilot project of the jurisdictional PPP approach in Banyuasin District, focusing on palm oil, will use the development of a Regional Action Plan on Sustainable Palm Oil (RAD-KSB) as an entry point. A multistakeholder platform on the development and implementation of the RAD-KSB has been developed as a primary vehicle for the implementation of the jurisdictional PPP. An integrated monitoring framework, which contextualises Sustainable Jurisdictions Indicators, Forest Governance Indicators and other sustainability and legality-related indicators, is being developed to incentivise implementation of the RAD-KSB.

The pilot also serves as a laboratory for the implementation of EFI’s tools, such as the Land-Use Planner and Forest Governance Index, as well as the tools developed or promoted by our partner, the World Resources Institute Indonesia. These include the Accountability Framework Initiative, Global Forest Watch Pro and Greenhouse Gas Protocol. At the same time, the pilot also supports the implementation of the government’s programmes, such as the mechanism to monitor the performance of oil palm concessions through the Plantation Business Assessment and efforts to accelerate smallholders’ registration through the issuance of Cultivation Registration Permit.

The use of these tools and standards, combined with training for district government officials, companies and smallholders, should help expedite the implementation of the RAD-KSB and the achievement of district-level sustainability goals agreed upon by the stakeholders. For example, at the local level, the Land-Use Planner is being used to support oil palm smallholders in one village to transition from oil palm monoculture to agroforestry, as part of the requirement for obtaining a social forestry permit. Such local-level activities are also designed to help induce stronger collaboration among oil palm companies, mills and nearby smallholders, for example in terms of sourcing and traceability.

Meeting with a smallholder community interested in the sustainability project of oil palm and rubber, to discuss the jurisdictional approach, their role and expected benefits.

Results and impact

The pilot has supported the establishment of a Public Private Partnership (PPP) platform, in the form of Special Task Force, or TPD (Tim Pelaksana Daerah), to streamline the implementation of sustainable frameworks within the palm oil supply chain, thus serving as a benchmark for sustainability, for the production of the Regional Action Plan for Sustainable Palm Oil (RAD-KSB).

Additionally, this task force will actively contribute to the implementation process, including the establishment of monitoring mechanisms aimed at tracking the achievement of indicators.

Finally, the lessons for relevant stakeholders, including the EU REDD Facility partners in Indonesia and beyond, can be used to inform future partnership approaches.