Indonesia's Forest-Zone Oil Palm Dilemma: Why Laws Aren't Enough

A policy forum shows that effective restoration must balance forest protection with smallholder livelihoods, land rights, and economic interests

MAKASSAR, Indonesia, Aug. 27, 2026 /PRNewswire/ -- A policy analysis involving researchers from Hasanuddin University finds that Indonesia's shift from gradual rehabilitation to stricter enforcement has not fully addressed the drivers of oil palm expansion in state forest zones and has created uncertainty for smallholder farmers. The study argues that forest restoration must balance environmental protection with livelihoods, land rights, and effective governance.

Indonesia, the world's largest palm oil producer, has an estimated 3.4 million hectares of oil palm within state forest zones. In 2020–2021, the government introduced Strategi Jangka Benah (SJB), or "Rehabilitation Period Strategy," allowing existing plantations to remain temporarily while farmers gradually introduced trees and food crops. In early 2025, Presidential Regulation No. 5/2025 (Perpres 5/2025) shifted toward stricter enforcement, including penalties and state reclamation.

Researchers led by Professor Muhammad Alif K. Sahide of the Faculty of Forestry, Hasanuddin University, Indonesia examine these policy shifts in an article published in Forest Policy and Economics in August 2026. Through field engagement in Central Kalimantan and West Sulawesi and analysis of policy and legal documents, the researchers found that SJB offered few incentives to replace profitable oil palm plantations, while Perpres 5/2025 could further marginalize smallholders by creating uncertainty over reclaimed land.

The researchers call for clearer land rights, community participation in restoration, secure social forestry arrangements, and better coordination between agriculture, forestry, and energy policies. They argue that the challenge is not simply to introduce new policies, but to build governance that can balance economic, social, and ecological goals.

Reference
Title: Policy forum: Between incorporation and reappropriation – The unresolved dilemma of oil palm in Indonesia's forest zones
Journal Name: Forest Policy and Economics
DOI: 10.1016/j.forpol.2026.103835
Author Names: Muhammad Alif K. Sahide, Fatwa Faturachmat, Abdurahman Abdullah, Muh Ichwan Kadir, Ahsan Yunus, and Ahmad Maryudi

Funding information
Hasanuddin University

Media contact:
Name: Professor Muhammad Alif K. Sahide
Email: [email protected]
Contact Number: +62 823-9357-0098

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SOURCE Hasanuddin University