E X C E L L E N C E T H R O U G H D I S C I P L I N E

Enhancing the Future of Indonesia Palm Oil With Sustainable Landscape

ProjectLim Sian Choo

Bumitama

E X C E L L E N C E T H R O U G H D I S C I P L I N E

$17.8 BExport Value in

2016

12.3% from total export value

$16.5 BExport Value in

2015

12.0% from total export value

3 M KL =

16,62 M barrel =

45.540 barrel/day

Palm Oil based Biodiesel produced

8.4 M

employment

6.8% of labour

force in 2015

Source: BPDPKS, 2017 APROBI, 2017

BPS, 2017

Palm Oil: Indonesia’s Biggest Export

5.0 M

employment

4.3% of labour

force in 2010

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Some of Indonesia Palm Oil Concerns

Low Yield Climate & high cost change

Overlap, unclear regulations: business, peat, conservation

Low Productivity

Regulatory Uncertainty

Negative Image

Price DownstreamVolatility maturity?

Price & Downstream

Industry

Interventions & Initiatives

Indonesia Palm Oil Fund Management Agency: fund collected $8 B/y

Forestry vs Spatial Plan; PP 60, PP 62 PP71; BRG Peat Restoration Agency;

Kawasan Ekosistem Esensial (KEE)

E X C E L L E N C E T H R O U G H D I S C I P L I N E

How International Stakeholders See Palm Oil: “Exit, Voice or Engage”

• India & China!!??

• European Palm Oil Conference, 2015: “Boycotting palm oil is NOT the answer. Other alternatives to palm oil is not always better for food concerns, but almost certain will be worst for sustainability.

• The answer is to produce a more sustainable palm oil: a certified sustainable palm oil”

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Despite Indonesia being the largest producer of sustainable palm oil, Indonesia is still seen viewed as not doing enough.

Therefore, we need a new way for securing the future of Indonesia palm oil industry.

Multi-stakeholders sustainable landscape efforts is required, engaging government, companies, local communities, international & local NGOs,

buyers, end customers, and by complying with national & global sustainable standards of NDPE

Region Jun-15 % Jun-16 %

Indonesia 1,527,421 46% 1,547,241 55%

Malaysia 1,364,277 41% 756,595 27%

Latin America 156,467 5% 258,180 9%

Rest of Asia Pacific 220,232 7% 235,959 8%

Africa 32,256 1% 32,283 1%

3,300,653 100% 2,830,258 100%

Certified Area by Region

Source: RSPO, 2016. Numbers for Malaysia exclude suspended members

E X C E L L E N C E T H R O U G H D I S C I P L I N E

“Business As Usual” Scenario• Intact forest is located in the “heart

of Borneo”. Elsewhere secondary forests are fragmented

• Government allocates land use on economic reasons, after setting aside conservation area

• Oil palm and other companies maximises their concessions, except for HCV, deep peat. CSR program may be implemented

• Community engages in shifting cultivation or agroforest practices: slash & burn mostly

• Encroachment with or into national park, illegal logging, illegal mining…

• Food & other basic needs are supplied from other regions

• Fire rages almost every yearLandstat, 2010

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Source: IDH, 2016

Ketapang, the biggest district in W Kalimantan, has at least 5 landscapes with significant fragmented forests:

1. Gunung Palung – Gunung Tarak – Sungai Putri

2. Mangrove Ecosystem

3. Fresh Swamp Water

4. Batu Menangis – Rongga Perai

5. Pematang Gadung – Pesaguan - Kendawangan

Those fragmented forests need to be connected to ensure and improve biodiversity sustainability

Why Ketapang

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Bumitama

• A young producer of CPO and PK in Indonesia,

• Total land bank of 225,000 ha

• Started in 1996 in Central Kalimantan and listed on the Singapore Stock Exchange in 2012

• Launched New Sustainability Policy in 2015, covering our NDPE (No Deforestation, No Peat Planting & No Exploitation) commitment

E X C E L L E N C E T H R O U G H D I S C I P L I N E

How did it start:Started with discussion on HCV protection, to connectivity using the main river in GMS. It morphed and grew into this very ambitious and interesting landscape project, involving multi stakeholders, covering various themes like improving biodiversity, communities also guardian to conservation, communities livelihood and capacity building, government engagement and etc

The project expanded with the inclusion of a new concession, PT DAS

Bumitama Biodiversity & Community Project (BBCP)

Conservation area of project :PT GMS – 1,100 haPT DAS – 6,500 ha

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Introduction:- Surrounded by national park, protected

forest, good intact secondary forest (HCS, HCV)

- Natural corridor needed by flag –endangered species; orangutan

- Deep peat forest with unique biodiversity- Existing practices of illegal logging, mining - Some area was damaged by fires, either

natural or shifting cultivation - Some local community is near poor

(unsystematic job and economic development)

- Bad agricultural practices- Moderate infrastructure development - Water resources not managed holistically

Conservation area of project :PT GMS – 1,100 haPT DAS – 6,500 ha

Bumitama Biodiversity & Community Project (BBCP)

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Purpose: Protection, Production & Inclusion

• Biodiversity corridor, peat conservation & restoration

• Local economy development

• Synergy with government’ social forestry program

• Village planning & development

• Improving smallholders‘ productivity & sustainability

In partnership with IDH and Aid Environment and others

Conservation area of project :PT GMS – 1,100 haPT DAS – 6,500 ha

Bumitama Biodiversity & Community Project (BBCP)

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Objectives of BBCP

• Biodiversity protection, especially endemic & flag species

• Rehabilitation of forests (peat, regenerating)

• Protecting forest area from illegal loggers, miners, hunters, fire

• Alternative sustainable livelihood to prevent community from unsustainable livelihood

• Inclusion of wider stakeholders’ interests Government, NGOs, community, other companies, international audience

• Ensuring sustainable production of oil palm in plantation and smallholders estates

• Assisting smallholders (palm oil) to legaliseits operations & practice sustainable agricultural practices, certification

E X C E L L E N C E T H R O U G H D I S C I P L I N E13

Village level planning to ensure conservation, social forestry & alternative sustainable livelihoods

Improve smallholders productivity

Long term vision for sustainable local development

Leadership from Government for reforestation, connect fragemented forests & implement social forestry, Kawasan EkosistemEsensial

Suppoort from wider stakeholders, esp peer companies, for sustainable landscapse concept, starting from biodiversity corridors, non timber forest products, to sustainable development

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Timeline

• Securing buy-ins from stakeholders

• Local economy development• Biodiversity corridor and

connectivity• Reforesting and enriching

• Funds for Ecotourism projects• Getting government protection for

set-asides conservation area• Sustainability certifications for

smallholders• Engaging – growers and

international stakeholders

• Ensure sustainable post project • Engaging government &

industry to use sustainable landscape concept as showcase for enhancing the future of Indonesia sustainable palm oil

• Replication to other landscapes• Self managed conservation

areas

Short Term <1 year

Medium Term 1-3 years

Long Term > 3 years

E X C E L L E N C E T H R O U G H D I S C I P L I N E

Summary

• We need a new way for enhancing the future of Indonesia as the biggest producer of sustainable palm oil

• Sustainability should be applied across the board

–Not only companies, smallholders, community

–Government

–Key business players: bankers, retailers

–Consumers

• Sustainable landscape project provide ways to engage with all stakeholders in meaningful, win-win ways

– International stakeholders need to be convinced on the sustainability of Indonesian palm oil

–Sustainable landscape projects are offering new ways of engaging wider international stakeholders