East Kalimantan to halt issuance of palm oil permits

Jakarta Globe: Tunggadewa Mattangkilang | January 15, 2013

Concerned about the fast degradation of the environment in East Kalimantan due to the high number of plantation concessions issued, the provincial administration plans to issue a moratorium on new palm oil plantations starting this year, an official said on Monday.

"There have been already so many permits issued, therefore we will temporarily halt the issuance of new permits for new palm oil plantations," said Yayan Sabianoor, who heads the East Kalimantan Permit and Investment Board.

Yayan added that the moratorium would be implemented this year, but did not give an exact date. He said that permits have been issued in East Kalimantan for 2.4 million hectares of palm oil plantations, although by the end of last year only one million hectares had been planted with oil palms.

He said that his institution would instead prioritize investment in food crops, including rice estates. Yayan said that food and rice estates are strategic programs with multiplier effects that would help safeguard the nation's self-sufficiency in food.

"The permits will be issued again only after all that have been issued so far have actually been used and the palm oil plants are planted," Yayan said.

He also added that the issuance of the new permits in the future will also be based on land availability.

"The priority is for food crops and that will become the future of East Kalimantan," Yayan said. He said that the provincial government was hoping that investment would shift to the agriculture sector, especially in crop production.

As of the end of last year, East Kalimantan posted Rp 28.4 trillion ($2.94 billion) in new investments although the oil and gas sector accounted for most of it. Foreign investors accounted for 60 percent of the investment, while the rest was domestic. Yayan said the province was setting a target of attracting Rp 34 trillion in investments this year.

"We hope that more investors put their money into the agriculture field and are no longer merely investing in oil and mining. We will push them toward that," he said.

East Kalimantan wants to develop a food and rice estate in the province to make itself the country's food hub. A team tasked with accelerating that project has said that so far there were 24 investors from the private and public sectors who had expressed interest.

Officials have cited state firms Sang Hyang Seri, which wants to plant rice in 32,000 hectares of land in the districts of Berau and Bulungan; Pertani, with 30,000 hectares in the Paser Penajam district; and Pusri Holdings, with 30,000 hectares in Kutai Barat and the Tana Tidung district. Investors from the private sector include the Solaria Group, with 5,000 hectares in the Bulungan district; Miwon, with another 5,000 hectares in Bulungan; and Berau Jagung Raya, with 10,000 hectares in the Berau district. Provincial authorities have earmarked 344,461 hectares of land in 10 districts for food crops, with West Kutai offering 71,000 hectares.

"The need for food will rise in line with the increase in global population," Yayan said.