“Perverse Subsidies” for Oil Palm Plantations

The unauthorized expansion of oil palm plantations within the forestland estate comes at great public cost, not only in terms of environmental degradation and the undermining of good governance. Unauthorized development means a forfeit of tax revenue for the State. This can be construed as a “perverse subsidy” of the plantation sector if this development is left unaddressed.

With financial support from the Climate and Land Use Alliance (CLUA), throughout 2012 Aidenvironment and local partners will assess the loss of State revenue as a result of unauthorized plantations in forestland.

The project will start with a complete legal review, executed with the assistance of Indonesian legal experts. The final report and detailed maps will be available early in 2013. In the meantime progress can be followed on

Since decentralization of part of Indonesia’s decision-making on land use, numerous district governments have developed local land-use plans, with no regard for formal procedures for land-use planning, permit issuance and taxes payable. As a result, 9 million hectares of forestland (kawasan hutan) in Kalimantan have been put forward for release, mostly to allow oil palm and mining companies to expand. Acceptance of these proposals would mean large-scale “white washing” of illicit plantation permits that contravene the new Spatial Act and Forestry Act.

The objective of the project is to prevent the release of millions of hectares of forestland in Kalimantan by exposing the hidden subsidies to the palm oil industry at the expense of the enormous environmental cost and social injustice incurred by the Indonesian general public and global community.

For more information contact Meri Persch-Orth.