Get certified, Indonesia tells Malaysian oil palm investors

MEDAN: Malaysian oil palm planters in Indonesia will need to be separately certified under Indonesia Sustainable Palm Oil (ISPO), regardless of whether they have already been certified by the Roundtable on Sustainable Palm Oil (RSPO).

In an interview with Business Times here recently, Indonesia's Agriculture Ministry director of estate crop Rismansyah Danasaputra said RSPO-certified estates do not automatically qualify for ISPO. "It's not automatic but it (RSPO-certified firms) will be easier compared to those who are not certified at all," he said.

Rismansyah said the ISPO's principles and criteria are not the same as RSPO.

"First things first, the RSPO is voluntary whereas the ISPO is mandatory. Secondly, the ISPO is actually a reflection of a unified code of laws concerning best practices throughout the supply chain from oil palm planting to palm oil processing," he explained.

ISPO certification means compliance to all existing laws of four ministries namely Ministry of Agriculture, State Ministry for the Environment, the Ministry of Forestry and the National Land Agency. "The ISPO is meant to streamline the enforcement channels of various government agencies," he said.

Rismansyah explained that the ISPO is in line with the rules of the World Trade Organisation (WTO). It is designed to get a market guarantee through the mechanism of the WTO and other multilateral or bilateral agreements with buyers.

The RSPO, set up in 2004, was initially hailed as a forum where stakeholders of diverse interests are considered as equal partners. Somehow, over the years, the roundtable concept of equal duties and rights became lopsided. The RSPO has tipped in favour of environmental and animal rights activists as their expertise in communicating to the public and credibility assertion is being carried out at the expense of palm oil producers.

According to www.ispo-org.or.id, the Indonesian government seeks to restore balance of social and economic dimensions of oil palm cultivation to be on par with environmental conservation. "Only when the three dimensions of sustainability are proportionately accounted for and treated equally, then the generally accepted definition of sustainable oil palm planting can be achieved," he said.

If there are breaches of the laws, Rismansyah said, the violators will not be eligible to the ISPO certification. Citing an example of ISPO working within a legal framework, he said if an oil palm company is proven to be guilty of slash and open burning in the court, it will not be entitled to apply for ISPO certification.

On the estimated cost of ISPO certification, he said: "We're not charging the oil palm planters anything but the auditors will charge their fees. Although we have yet to finalise the list of auditors and their fee scale, the government does not want oil palm planters to be unnecessarily burdened. We're proposing to the auditors that there be a ceiling fee."

He added that the ISPO auditors will have to work closely with the National Accreditation Body of Indonesia.

The Decree of the Minister of Agriculture No. 7/2009 classifies all oil palm planters into Grade I, II, III, IV and V. Rimansyah said oil palm planters have three years to make adjustments to the ISPO criteria. If companies need advocacy to meet the requirements, assistance will be provided for six months to two years.

This year, Rismansyah said, 20 oil palm plantations are undergoing a trial to pursue the ISPO certification. The participants include PT Rea Kaltim Plan PT Ivomas Tunggal, PT Sime Indo Agro, PT Sumber Indah Perkasa PT Gunung Sejahtera and state companies such as PT Perkebunan Nusantara PTPN III, V, VI and XIII.

Association of Plantation Investors of Malaysia in Indonesia (Apimi) executive secretary Nor Hazlan Abdul Mutalib, who was also present at the interview, said his members fully support the ISPO certification. "Among the 20 companies, two are our members. In fact, all of our members are for sustainable agricultural and manufacturing practices as required by Indonesian laws. We appreciate the transparency in the ISPO process because it includes public consultation," he said.

As a founding component of the Indonesia-Malaysia Palm Oil Group, Nor Hazlan said Apimi members are committed to further investing in the republic. "Sime Darby Bhd has set aside RM350 million to set up a refinery in south Kalimantan. It will be able to process 2,500 tonnes per day.

"We're happy to share business development ideas for the mutual benefit of both countries. After all, Indonesia and Malaysia contribute to about 85 per cent of world supply of palm oil. This industry directly supports some five million jobs and livelihoods," he added.

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