NUSA DUA – Business players are facing a legal uncertainty to invest in the palm oil industries of Indonesia as a result of regulatory mess in the country, an expert said recently.
The expert from Bogor University of Agriculture (IPB University), Prof. Budi Mulyanto, who is also the Head of the Center for Palm Oil Studies at IPB University, said that the legal uncertainty is caused by regulatory fragmentation among many government institutions.
“More than thirty ministries and institutions have authority over the palm oil sector. This condition causes overlapping policies and unsynchronized data,” he said when addressing the first day of the 21st Indonesian Palm Oil Conference (IPOC) 2025 and 2026 Price Outlook in Nusa Dua, Bali, on Thursday (13/11/2025).
He said that such legal uncertainty had discouraged businesses to realize new investments in the palm oil sector. It shows unclear coordination among the concerned institutions, which makes business targets, including the sustainability target that is demanded by the global market, are difficult to achieve.
“The absence of a single authority creates overlapping regulations, unsynchronized data, unattainable sustainability targets, and an unstable investment climate,” he said.
Prof. Budi Mulyanto stated that Indonesia has a total of 16.8 million hectares (ha) of oil palm plantations, contributing total annual value of exports at US$30–40 billion. “More than 16.5 million workers depend on this sector. Around 42% of the total palm plantations are owned and managed by smallholders,” he said.
According to him, the legal status of smallholders should be also clarified, as many of them are still dealing with legal problems caused by overlapping land status. “Legal certainty must begin with justice for smallholders,” he said.
He emphasized that reforms should be based on the article 33 of the 1945 Constitution. Palm oil should be managed by the state for the greatest prosperity of Indonesian people. He cited the formation of a governance task force as a first step to pursue the reform.
Budi underlined the need for structural reforms that integrate law, policy, and economic diplomacy. “The reforms must be implemented comprehensively,” he said.
He pointed out the five pillars of legal certainty and investment. Those five pillars are legal certainty, policy stability, sustainable governance, social justice, and strengthening of down-streaming processes. “These pillars reinforce each other,” he said.
He also underlined the importance of a balance between justice and stability. Without both, investment cannot thrive. “When law brings justice and policy brings stability, investment will build prosperity. Those are the foundational aspects for the Indonesian economic sovereignty to grow firmly,” he said.
He also noted that legal reform should be seen as a process toward clarity. Reform will bring fiscal consistency, institutional transparency, and investment sustainability. He called this “structural rearrangement toward clarity.”
Prof. Budi Mulyanto said that palm oil is not just a commodity. It has also played an important role in economic diplomacy. “Now, the palm oil is not just an agri-commodity. It’s a strategic pillar of Indonesia’s economic diplomacy,” he said.
As a follow-up, Budi proposed the establishment of a National Palm Oil Agency, an independent institution fully authorized to manage the Indonesian palm oil industries from upstream to downstream. He hopes this institution will become the anchor of Indonesia’s palm oil diplomacy. “By having such independent agency, the Indonesian palm oil industries will be then managed under the principles of One Map, One Data, One Authority,” he concluded. (*)
Sawitkita.id. Carut Marut Regulasi di Sektor Sawit Picu Iklim Investasi Jadi Labil. https://sawitkita.id/carut-marut-regulasi-di-sektor-sawit-picu-iklim-investasi-jadi-labil/. 14 November 2025
