East Kalimantan Environmentally Sustainable Development Strategy

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The Case of Oil Palm Permits and Related Area Consumption
Permits for oil palm concessions are generally issued by the head of the district government, and
operators require three significant steps to legally operate a concession. At present, the official target
formalized in the long-term strategic plan is to have an additional 1 million ha of oil palm plantations
planted by 2025.
• Location Permit (Izin Lokasi, IL) is a preliminary boundary setting of a plantation, which is
issued by the district leader (Bupati or Walikota) based on a recommendation by the provincial
governor. At present, location permits for oil palm plantations in East Kalimantan cover an area
of 3.2 million ha, of which more than 400,000 ha are located on peatland. In the last six months,
the area for location permits increased by more than 350,000 ha.
• Plantation Business Permit (Izin Usaha Perkebunan, IUP) is issued by the Governor in
case of cross-district plantations or by Bupati or Walikota if not and requires an Environmental
Impact Assessment (AMDAL). Although location permits and plantation permits are formally
linked together and both are required, many companies operate with only one of the permits.
• Plantation Operating Permit (Hak Guna Usaha, HGU) is issued by the national land agency
(BPN) and is the final step for legally operating an oil palm concession. Approved and active
plantations with HGU cover approximately 465,000 ha at present, while HGUs have been issued
but not activated for another 300,000 ha.
however, this does not need to be the case. The new process could actually translate into a clear
competitive advantage for East Kalimantan in its efforts to attract new investments by reducing the
legal complexity and time consuming delays facing oil palm investors.
FORESTRY SECTOR
Forests have always been an important resource for East Kalimantan: valuable timber is collected
from legal logging, industrial plantations provide Acacia, Eucalyptus, Teak, and other tree species,
communities harvest non-timber forest products, and forests provide vital ecological and
environmental services such as watershed protection, biodiversity, habitat for countless species.
Yet, since the 1960s East Kalimantan’s production forests have experienced unsustainable rates
of logging, which have resulted in the degradation of the forests. Those high logging rates could
not be sustained as reserves of valuable timber were depleted and tree growth was insufficient
to replace stocks. Thus, the forestry sector has declined since the mid 1990s in both relative and
absolute terms in East Kalimantan’s economy.
DRAFT
With the exception of two FSC-certified concessions, East Kalimantan’s logging concessions
do not meet international best practices for reduced impact logging (RIL). Unsustainable logging
practices together with the conversion of natural forest into timber plantations and the decomposition
of degraded peatland within the forestry estate (Kawasan Hutan) result in estimated annual net
emissions of 45 MtCO2e, which makes the forestry sector the third largest emitter in the province.
Box 3
Significant reductions in forestry emissions are possible through the implementation of RIL
practices, more efficient use of areas already designated as timber plantations, better water
management in existing forestry concessions in peat areas, and a moratorium on granting new
concessions on peatland. Increasing productivity in existing timber plantations and RIL within
the logging concessions would enable a sustainable supply of wood to support an expanded
downstream industry, which in turn would increase local employment by an estimated 40,000 to
60,000 new jobs and contribute up to IDR 20 trillion to provincial GDP.