Indonesia’s shift from gradual rehabilitation to stricter state enforcement has failed to resolve the expansion of oil palm within state forest zones, creating mounting uncertainties for smallholder farmers, according to a policy analysis published in Volume 189 of the journal Forest Policy and Economics on August 1, 2026. Researchers from Hasanuddin University found that neither policy approach addresses the underlying drivers of forest conversion, highlighting an urgent need for more integrated governance that balances ecological goals with smallholder livelihoods.
The Scale of Indonesia’s Forest-Zone Oil Palm Challenge
As the world’s largest palm oil producer, Indonesia contends with an estimated 3.4 million hectares of oil palm cultivated directly within state forest zones, according to the study. Growing international pressure for sustainable palm oil sourcing prompted the Indonesian government to enact sweeping policy changes across recent years to rein in unauthorized agricultural expansion in these protected landscapes.
Those regulatory shifts began with the Strategi Jangka Benah (SJB), or “Rehabilitation Period Strategy,” which was introduced between 2020 and 2021. Rather than enforcing immediate removal, SJB granted existing cultivation a transitional period, allowing farmers to slowly transform monoculture palm oil plantations into mixed agroforestry systems incorporating trees and food crops. However, fieldwork in Central Kalimantan and West Sulawesi revealed that SJB struggled on the ground because oil palm is deeply entrenched in local livelihoods. The policy offered few financial incentives for farmers to replace highly profitable monoculture operations with slower-growing timber or food alternatives.
Shift Toward Stricter Enforcement Under Perpres 5/2025
In early 2025, the Indonesian government pivoted away from gradual transitions by introducing Presidential Regulation No. 5/2025 (Perpres 5/2025). This newer regulatory framework relies heavily on administrative penalties, potential criminal enforcement against violations, and direct state reclamation of forest land.
Sahide at the Faculty of Forestry’s Forest and Society Research Group (FSRG) at Hasanuddin University, the research team warns that Perpres 5/2025 leaves smallholder futures precarious. By focusing primarily on law enforcement and territorial control without securing local livelihoods, the regulation risks pushing reclaimed land into the hands of state-owned companies or other actors wielding greater political, bureaucratic, or financial influence. Consequently, smallholders face the threat of further marginalization.
Pathways Toward Integrated Forest Governance
The policy analysis argues that both SJB and Perpres 5/2025 represent a fragmented governance model that fails to address the root causes of forest conversion. While SJB favored social inclusion alongside gradual rehabilitation, Perpres 5/2025 prioritizes state control and punitive measures. To break this cycle, the researchers advocate for an integrated approach combining environmental protection with secure land rights and economic equity.
Recommended policy adjustments include clarifying legal land rights before issuing penalties, deploying social forestry programs to protect smallholders, and involving local communities directly in restoration planning. Additionally, the study stresses that government ministries governing agriculture, forestry, and energy must coordinate their agendas so that farming policies, biodiesel mandates, and forest conservation efforts point toward shared objectives.
Did You Know? Hasanuddin University, located in Makassar and named after Sultan Hasanuddin of the Gowa Kingdom, was established on September 10, 1956, and operates 18 faculties covering disciplines from medicine to agriculture.
Sahide emphasizes, designing sustainable environmental regulations requires building robust governance architectures capable of balancing economic, social, and ecological trade-offs transparently and equitably rather than relying on punitive measures alone.
Frequently Asked Questions
What is Strategi Jangka Benah (SJB)?
Introduced between 2020 and 2021, SJB was a transitional rehabilitation strategy allowing existing oil palm plantations in state forest zones to remain temporarily while farmers gradually converted monoculture fields into mixed agroforestry systems.
What does Presidential Regulation No. 5/2025 do?
Enacted in early 2025, Perpres 5/2025 shifts Indonesian policy toward stricter enforcement, introducing administrative penalties, potential criminal charges for violations, and state reclamation of forest land.
Why do current policies fail smallholder farmers?
According to the study, SJB offered inadequate economic incentives to abandon profitable palm oil, while Perpres 5/2025 prioritizes territorial control without securing smallholder land rights, risking the concentration of reclaimed land among powerful corporate or state actors.
How can Indonesia better balance palm oil production with forest preservation without harming rural communities?