InfoSAWIT, JAKARTA — Instead of offering clarity, the issuance of Government Regulation (PP) No. 45/2025 is feared to create a new chapter of legal uncertainty for Indonesia’s palm oil industry. The regulation—intended to resolve millions of hectares of oil palm planted within forest areas without permits—is considered inconsistent with the spirit of the Job Creation Law and may drag the sector into a darker outlook.
This concern was raised by Muhamad Zainal Arifin, S.H., M.H., Director of the Center for Natural Resources Law Studies and Advocacy (PUSTAKA ALAM), in a statement provided to InfoSAWIT. According to him, PP 45/2025, which revises PP No. 24/2021, fails to offer the legal clarity expected by industry players and instead opens space for new conflicts.
“The initial expectation was that through administrative fines, existing oil palm plantations in forest areas could obtain business legality. But PP 45/2025 introduces the concept of state repossession. After paying fines, plantations are not automatically legalized—they are instead taken over and handed to state-owned enterprises,” Zainal explained.
He further noted that, from a legal philosophy standpoint, Law No. 6/2023 on Job Creation mandates an ultimum remedium approach, where administrative violations should be resolved through fines—not criminalization. However, Article 3(5) and Article 35A of PP 45/2025 shift away from that principle.
“This is no longer administrative enforcement, but a form of disguised nationalization,” he asserted.
Criticism also arises regarding the formula used to calculate fines, which is deemed disproportionate. The regulation sets a flat rate of Rp 25 million per hectare per year, without considering profitability or productivity levels. Yet the explanatory notes of Article 110B of the Job Creation Law require fines to be calculated based on a percentage of business profits.
“This flat-rate formula eliminates substantive fairness. In some cases, fines can balloon to five times the amount mandated by law. For example, PP-based calculations could reach Rp 2.5 trillion, whereas the law-based formula would be around Rp 500 billion,” he said. (*)
More details in InfoSAWIT Magazine, October 2025 Edition
