InfoSAWIT, BOGOR — The Indonesian palm oil industry is facing mounting pressure as administrative fines imposed by the Forest Area Enforcement Task Force (Satgas PKH) draw sharp criticism from legal experts, academics, and business players. The fines—amounting to tens or even hundreds of trillions of rupiah—are widely seen as excessive and could trigger mass bankruptcies, undermine investment confidence, and lead to large-scale layoffs across the sector.
As of December 2025, Satgas PKH has collected administrative penalties totaling Rp38.6 trillion from 71 companies, most of them operating in the palm oil and mining sectors. The sanctions are based on Government Regulation No. 45/2025, an amendment to Regulation No. 24/2021, targeting companies deemed to be operating within forest areas.
The pressure is expected to intensify in 2026. The government estimates potential administrative fines from the palm oil sector could reach Rp109.6 trillion, while mining-related penalties may amount to Rp32.63 trillion. At the same time, the state claims to have regained control over 4.08 million hectares of forest land.
Forestry law expert Dr. Sadino from Al Azhar University Jakarta warned that the fine scheme could wipe out hundreds of palm oil companies. He criticized the fixed fine of Rp25 million per hectare per year, applied retroactively.
“For a 20-year-old plantation, the total fine can reach Rp375 million per hectare—far exceeding the market value of palm oil land, which averages only Rp50–100 million per hectare,” he said.
Sadino argued that Regulation 45/2025 contradicts the Job Creation Law and violates fundamental legal principles by applying retroactive sanctions and changing the fine calculation from profit-based to a flat-rate system.
Out of 429 palm oil companies listed in the third and fourth phases of forest area reclamation, Sadino estimates that 235 companies (55%) are at high risk of insolvency, with average fines exceeding Rp187.5 billion per company.
Echoing the concern, Prof. Sudarsono Sudomo of IPB University stressed that forest enforcement must be proportional and grounded in field verification. “Palm oil is not just a business—it is an economic ecosystem supporting millions of rural households,” he said.
Natural resource policy expert Prof. Budi Mulyanto warned that forcing such fines could trigger a chain reaction of bankruptcies and mass layoffs, potentially eliminating 1.5–3 million jobs nationwide.
“Law enforcement must continue, but it cannot sacrifice legal certainty, economic sustainability, and social stability,” he concluded. (T2)
