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The Importance of Indonesian Sustainable Palm Oil (ISPO)
for Companies and Smallholders to Support Sustainable Environment and International Business
Presented by :
R. AZIS HIDAYAT
Chairman of the Secretariat ISPO Commission
Special Lectures on Oil Palm WPLACE 2017 Jakarta, 18-20 October 2017
I. Introduction
• Palm Oil is an important commodity and a versatile raw
material for both food and non-food industries. Driven by
international demands, the past few decades have seen a rapid
expansion of palm oil cultivation and production, generating
improvements in livelihoods for millions of Indonesians, also
state income from devisa.
• As the global leader of palm oil production, Indonesia plays an
importance role in mitigating environmental impacts and
ensuring a sustainable product for consumers around the
world.
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• As part of this commitment, the Indonesian Government has
established the Indonesian Sustainable Palm Oil (ISPO)
standard and certification system; launched by the Ministry of
Agriculture in March 2011 ( the MoA Decree No. 19/2011 ) and
was updated in March 2015 ( the MoA Decree No. 11/2015) is
now known as the ISPO Certification System.
• The aim of ISPO is to ensure the adherence to government laws
and regulations relating to palm oil plantations, around 16 Acts,
Presidential Decrees and Ministry Decrees; so that sustainable
palm oil is produced and support the commitment of the
President of the Republic of Indonesia to reduce national GHG
emissions.
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• Indonesian Sustainable Palm Oil (ISPO) is a bussiness system
in the field of oil palm plantation which are economically,
socially and environmentally viable based on existing law in
Indonesia and it is compulsory (mandatory).
• ISPO is a policy taken by the Government of Indonesia
through the Ministry of Agriculture in the Indonesian oil palm
sector which expected to overcome various problems raised by
the NGOs such as deforestation, killing endangered animals,
impoverishing farmers and GHG emissions. The attack of the
NGOs seems endless. Indonesian Palm Oil also faced no tariff
barriers which restricted it to be purchased in certain
countries.
II. THE IMPORTANCE OF ISPO
• ISPO intended to encourage the sustainable production of palm
oil by fulfilling its duty to do plantation business in accordance
with existing rules and regulation in Indonesia, to protect and
promote the sustainable production practice as demanded by
the international market.
• For Indonesia, palm oil has a distinctive strategic value in
supporting national development, such as :
- an economic prime mover that stimulate agribusiness
development from upstream rural areas to downstream
export hubs and processing areas,
- able to create significant job opportunities and serve
as a source of income for rural communities and farmers,
- able to produce a commodity highly sought after
internationally that generates significant national revenue.
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III. THE MAIN ROLE of PALM OIL
in INDONESIA:
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Palm Oil export 2016 : 12,32% of the total Indonesia exsport or
13,56% from the Non Fuel exsport
Palm Oil Value of export in 2016 US $ 17,8 Miliar ( 25,7 Billion Ton
CPO, PKO, dan derivate; also 5,2 Billion Ton Bungkil dan shell ),
bigger than th 2015 US $ 16,5 Miliar.
B-20 PROGRAM : Product of BIODIESEL 2,7 Billion KL;
IMPACT of BIODIESEL : Reduce GHG Emission 4,49 Billion Ton
CO2; Value added from Downstream Biodiesel Industry Rp 4,4
Triliun; Devisa efficiency & Reduce Fuel Consumption Rp 14,83
Triliun.
The Role of Indonesian Palm Oil as The Biggest
Indonesia Revenue in 2016 ( source : Dr. Bayu Krisnamurthi/ Dirut BPDPKS )
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A. ISPO
PRIMARY
OBJECTI
VE
Streamline and Enforce Compliance of
Government Regulation for Growers and other
Stakeholders along the Length of the Supply Chain
Position the Sustainable Development of Palm Oil
as an Integral part of the Indonesian Economy and
in the Improvement of Rural Livelihoods
Improve the Competitiveness of Indonesian Palm
Oil within the Global Market
Support Indonesia’s Commitment to Reducing
Green House Gases
IV. WHAT IS ISPO ?
Support Indonesia’s Commitment to Preserve
Natural Resources and The Environment
B.The Basis of ISPO Standard and
Certification System
• ISPO adopted all Indonesian rules and regulations related to
sustainability;
• Adopting regulations and implement it as mandatory standard
which guarantee that all palm oil planters fulfill the Indonesian
regulations;
• For plantation company who do not implement regulations will
be imposed by penalties ;
• The Indonesia sustainability principles also adopt the
international principles;
• Producing ISPO palm oil will reduce deforestation and improve
environment condition.
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Plantation Classification based on Ministry of Agriculture
Decree No. 7/2009
Plantation Classified as Class I,II,III, could purposed for
ISPO certification process, meanwhile plantation classified
as Class IV and V, needs to be evaluated
ISPO regulation refers to Ministry of Agriculture Decree No.
19/2011 on the Guideline on Indonesian Sustainable Palm Oil
stipulated on 31 March 2011 in the State Sheet No. 179/2011
ISPO implementation is mandatory, with
transparent and dependable certification process
Minister Of Agriculture Decree No. 11/ Permentan/
OT.140/3/2015 its about Indonesian Sustainable Palm Oil
Certification System (ISPO)
C. Legal Aspect
D. Pre- Certification Requirement
• Prior to ISPO certification of oil palm plantation and its mill
shall be assessed in accordance to Minister of Agriculture
Regulation No.07/2009 on Guidelines for plantation Business
Assessment.
• Oil palm plantation will be assessed on the following criteria:
Legal Permit; Plantation Management; Processing; Social
Economy; Environment; and Reporting.
• The plantation will be classified into Class I, II, III, IV and V.
Only oil palm plantation classified as Class I, II, and III are
eligible to apply for ISPO Certification, and submit the
application by the end of September 2015.
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E. ISPO Certification System
• ISPO Certification system is impartial and independent.
• Certification assessment done by third party which is
Certification Body. The certification body is accredited by
National Accreditation Committee and approved by ISPO
Commission.
• ISPO certification system is in accordance to International
Organization for Standardization (ISO).
• ISPO currently approved 12 Certification Bodies and acknow
ledged 1.142 ISPO Auditors ( Auditor on CB and Internal
Auditor for Companies ).
• The Secretariat of ISPO Commission function to supervise and
to facilitate the activities of Certification Bodies and Training
for ISPO-Auditors.
F. ISPO Sustainability Principles
1. The Legality of Plantation Business,
2. Plantation Management,
3. Protection to the Utilization of Primary Natural
Forest and Peatlands,
4. Environment Management and Monitoring,
5. Responsibilities to Workers,
6. Social Responsibility and Community Economic
Empowerment,
7. Sustainable Business Improvement.
G. Standard of ISPO
Standard of ISPO now should be implement by:
1. Plantation Companies (7 principles)
2. Plantation only without Mill (7 principles)
3. Mill without Plantation (7 principles)
4. Plasma Smallholders (6 principles)
5. Independent Smallholders (4 principles)
The implementation of Standard No. 1, 2 and 3 is
mandatory, while the remaining are voluntary.
H. ISPO Principle & Criteria
• ISPO consist of 7 (seven) Principles, 52 Criteria and
141 Indicators that have been referenced from several
Ministries, such as the Ministry of Agriculture,
Ministry of Environment and Forestry, Ministry of
Manpower, Ministry of Land Board and Landscape,
Ministry of Industry, and Ministry of Trade.
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I. ISPO Protect Environment
• Strictly, implement Indonesian regulation to protect national
park , natural water resources, river bank, beaches area prone to
natural disaster , forest or grassland with high biodiversity and
historical area.
• ISPO also protect endanger species, flora and fauna plantation
has to observe the present of endanger species and find reasons
and ways to know if this species disappear.
• Endanger species can not be kept/ maintain in the plantations,
without special treatment and permit given by the government/
Ministry of Environment & Forest .
• We do not implement HCV in ISPO but protection as according
to our regulation, it called NKT ( Nilai Konvervasi Tinggi) .
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J. ISPO - CERTIFICATION BODIES Approved by ISPO Commission
1. Mutu Agung Lestari
2. Tuv Nord Indonesia ( Germany )
3. Sucofindo (Persero)
4. Tuv Rheinland Indonesia (Germany )
5. SAI Global ( Australia )
6. Mutu Hijau Indonesia
7. SGS Indonesia ( Switzerland )
8. BSI Indonesia ( UK )
9. AJA Indonesia ( UK & Italy )
10. Mutu Indonesia Strategis Berkelanjutan
11. Agri Mandiri Lestari
12. Bureau Verietas ( France ) 17
V. The Performance of ISPO
• The Performance of the ISPO Certification ( up to 30
September 2017):
• The Palm Oil Companies and Smallholders participated on
ISPO since 2011 – 2017 : 557 ( 551 Companies, 5 KUD/KSU
Plasma, dan 1 Independent Smallholders Association) :
• Audit Report received by the ISPO Secretariat : 376 ,
• ISPO Certification approved by the ISPO
Commission : 306 ( 81,04 % )
• On going process for approval : 70 Audit Report
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Realization of ISPO Certification 2011- 2017
On 2013 and 2014 , approval of ISPO Certificates for 63
Companies : Plantation 549,468 Ha and CPO Production
2,821,567 ton;
On April 2015, approval of ISPO Certificates for 33 Companies
: Plantation 297,278 Ha and CPO Production 1,027,484 ton;
On February 2016, approval of ISPO Certificates for 53
Companies : Plantation 205,794.10 Ha and CPO Production
1,103,323.10 ton;
On July 2016, approval of ISPO Certificates for 35 Companies :
Plantation 212,452.29 Ha and CPO Production 1,145,267.87
ton;
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On December 2016, approval of ISPO Certificates for 42
Companies : Plantation 87,772.06 Ha and CPO Production
332,775.42 ton;
On April 2017, approval of ISPO Certificates for 38
Companies and 2 Smallholders ( KUD Plasma dan 1 Asosiasi
Kebun Swadaya ) : Plantation 249,543.37 Ha CPO Production
861,425.82 ton;
On August 2017, approval of ISPO Certificates for 40
Companies : Plantation 202,427.17 Ha and CPO Production
861,425.82 ton; 539,265.88 ton;
The Total Approval of ISPO Certificate 306,
Plantation 1,882,075.85 Ha and CPO Production
8,147,013.63 ton;
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VI. Penalties
• If until the end of September 2015, oil palm
plantation companies do not implement ISPO or do
not apply for ISPO, their classification class will be
revoked to Class IV. This means that they can not
apply for ISPO certification.
• They will be given reminder 3 times in the span of 4
months and failing to comply to this requirements thus do
not implement ISPO, its Plantations Business Lisence
(IUP) will be revoked and later their HGU can also be
removed.
1. UNDP ( United Nation Development Program )
2. RSPO ( Roundtable Sustainable Palm Oil )
3. ISCC ( International Sustainable Carbon Certification )
4. IFC ( International Finance Corporation )
5. CI (Conservation International)
6. ILO (International Labour Organization )
7. IDH the Sustainable Trade Initiative.
8. INOBU (Inovasi Bumi).
9. Leadership Park Institute
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VII. Partnership ISPO with International
Organization for Independent Smallholders
Partnership for Independent Smallholders
1. Joint Project Ministry of Agriculture with UNDP is assisting
independent smallholders to be certified by ISPO:
- The pilot project are in Riau, South Sumatera and West Kalimantan,
- So far survey already done in Riau, then it will continue to West
Kalimantan and South Sumatera,
- On 2016 SPOI-UNDP have a plan to certify 2,200 Smallholders in
Riau province; has been audited on December 2016,
- Realization : Amanah Smallholders Association received ISPO
Certification for 400 Ha/ 200 KK on April 2017.
2. The Secretariat ISPO Commission- MoA have joint project with Internatio
nal Finance Corporation (IFC) in assisting independent smallholders to be
certified by ISPO:
- The pilot project are in Rantau Prapat at South Sumatera,
- The Secretariate ISPO Commission will established the socialization dan
give ISPO training for the Local Government, Extention Workers, Palm Oil
Association and Farmers.
3. The Secretariat ISPO Commission- MoA have joint project with
Conservation International (CI) is assisting independent small holders to
be certified by ISPO :
- On March 2017, The Secretariat ISPO Commission established the
socialization dan give training about ISPO for the Local Government,
Extention Workers, Palm Oil Association and Farmers at Sorong and
Manokwari -West Papua.
Also, on April 2017 at Rantau Prapat- North Sumatera.
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4. The Secretariat ISPO Commission- MoA established partner
ship with RSPO ( Rountable on Sustainability Palm Oil ) on
Joint Study and Combined Audit for Palm Oil Sustainable
Certificate- The pilot project are in South Sumatera.
5. The Secretariat ISPO Commission- MoA established partner
ship with International Sustainable and Carbon Certification
(ISCC) on training and promotion.
On August 2017, ISPO have joined Basic Training ISCC at
Bali. We’ll establish for Independent Farmers at Jambi.
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6. The Secretariat ISPO Commission- MoA will establish partner
ship with IDH to prepare the smallholders for audit ISPO
toward Palm Oil Sustainable Certificate :
- The pilot project will be in Lalan-South Sumatera.
7. The Secretariat ISPO Commission- MoA will establish partner
ship with InoBu ( Inovasi Bumi ) to prepare the smallholders
for audit ISPO toward Palm Oil Sustainable Certificate :
- The pilot project will be in Central Kalimantan.
8. On going process, The Secretariat ISPO Commission- MoA will
establish partnership with International Labour Organization
(ILO) : observation and joint information on Palm Oil Worker.
VIII. ISPO International Promotion and
Diplomacy
• In 2015, the Government of the Republic of Indonesia
organized ISPO delegation to promote ISPO to India,
Netherlands, Belgium and Germany.
• ISPO Commission also visited European Commission
for ISPO Standard for Renewable Energy approval
under the coordination of Indonesian Embassy in
Brussels.
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ISPO CERTI
FICATION
Improve Productivity and Yield through the
Improvement of Good Agriculture Practices (GAP)
Improve Stakeholders and Buyers Trust
Competitive Advantage both Domestically and
Internationally due to Renewed Credibility
Improved Management of Corporate Social
Responsibility through the Reduction of Negative
Environmental and Societal Impact
VI. The Benefits of ISPO Certification
for Growers
Confidence in Complete Regulatory Compliance,
also Increased Support,Knowledge Sharing, as an
Objective Campaign.
1ST INTERNATIONAL CONFERENCE – ISPO :
11-12 April 2017 at Jakarta Convention Center
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Thank You Very much,
ISPO is The TRULLY SUSTAINABILITY