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Green Commodities Programme Indonesia
Why Palm Oil Matters and Why It Needs Reform in Indonesia
Why Sustainable Palm Oil Matters
Indonesia is the world’s largest producer of palm oil, producing more than 45 million tons each year and supplying over half of global exports. From food and cosmetics to biofuels, palm oil is widely used commodity found in everyday life worldwide, making Indonesia a critical supplier in global value chains and food systems.
Domestically, palm oil is a backbone of Indonesia’s economy. In 2024 alone, the sector generated USD 22.9 billion in exports revenue and supports an estimated 16.5 million direct and indirect jobs. These livelihoods are concentrated largely in rural and underdeveloped regions, where palm oil plays a central role in income generation and local development.
Despite its economic importance, the palm oil sector has long faced environmental, social, and governance challenges. These include land-use pressures, environmental degradation, uneven smallholder inclusion, and gaps in institutional coordination. Addressing these challenges requires systemic reform, not isolated interventions, including coherent policies, strong governance frameworks, and sustained collaboration among government institutions, the private sector, and communities.
The Green Commodities Programme (GCP) is a global initiative led by UNDP and funded by the Swiss State Secretariat for Economic Affairs. It supports countries in transforming agricultural commodity sectors toward long-term environmental sustainability, social inclusion, and economic resilience.
In Indonesia, GCP focuses specifically on sustainable palm oil governance. The programme is implemented in partnership with the Coordinating Ministry for Economic Affairs and supports the Government of Indonesia to strengthen policy and regulatory frameworks, foster inclusive, gender-responsive multi-stakeholder collaboration, and build institutional capacity at national and subnational levels.
Rather than implementing activities directly on the ground, GCP plays an enabling role supporting coordination, policy alignment, and institutional effectiveness. GCP's engagement in Indonesia reflects a long-term partnership spanning three phases over more than a decade:
Phase I and II: 2015 - 2023
Phase III: 2023 - present
Phase III of GCP builds on earlier reforms while supporting Indonesia’s transition to a new National Action Plan on Sustainable Palm Oil (NAP SPO) 2025–2029, which will be formalized through a new Presidential Regulation (Perpres).
In this phase, GCP supports the Government of Indonesia across four interlinked areas:
Supporting the New NAP SPO 2025–2029
Phase III focuses on strengthening Indonesia’s palm oil governance framework following the conclusion of the previous National Action Plan on Sustainable Palm Oil (NAP SPO) in 2024. To ensure continuity, the Government of Indonesia is preparing a new Presidential Regulation (Perpres) for NAP SPO 2025–2029.
GCP supports this transition by providing technical and coordination support to maintain momentum in national palm oil reform.
Multi-Ministry and Stakeholder Engagement
GCP has played a convening role by coordinating with at least 16 ministries and institutions, subnational governments, and the NAP SPO Secretariat to refine the draft regulation. This includes close collaboration with the Ministry of National Development Planning to ensure alignment with Indonesia’s national development plans.
Regional Action Plans on Sustainable Palm Oil (RAP SPO)
Recognizing that palm oil challenges vary across regions, GCP continues to support the Ministry of Home Affairs in updating technical guidance for subnational governments in preparing and implementing Regional Action Plans on Sustainable Palm Oil (RAP SPO). These plans enable provinces and districts to tailor national sustainability objectives to local contexts and priorities.
Institutional Integration
At the governance level, there are plans to establish a joint secretariat for the Indonesia Sustainable Palm Oil (ISPO) system and NAP SPO. This integration aims to strengthen coordination, improve efficiency, and create a more coherent institutional structure for managing palm oil sustainability.
Palm Oil Revenue Sharing Fund (Dana Bagi Hasil Sawit)
In collaboration with the Ministry of Finance, GCP is assessing how the Palm Oil Revenue Sharing Fund (Dana Bagi Hasil Sawit) can be used more effectively to support RAP SPO implementation at the subnational level. The programme is also exploring options to use this mechanism to sustain the NAP SPO Implementation Team and Secretariat beyond the lifetime of the programme, supporting long-term institutional viability.
Mainstreaming GESI in Palm Oil Governance
Gender Equality and Social Inclusion (GESI) has been a core commitment of GCP since its inception. In Phase III, GCP works closely with the Ministry of Women’s Empowerment and Child Protection to integrate GESI principles into palm oil policies and governance frameworks. This approach ensures that sustainability reforms contribute to equitable benefits for women, smallholders, and vulnerable groups.
During Phases I and II, GCP supported the development and issuance of Indonesia’s first national roadmap for sustainable palm oil: the Presidential Instruction (Inpres) on NAP SPO 2019–2024.
This framework addressed systemic challenges across five pillars:
Improving data, infrastructure, and strengthening coordination
Enhancing smallholder's capacity and productivity
Managing and protecting environment
Strengthening plantation governance and conflict resolution
Accelerating Indonesia Sustainable Palm Oil (ISPO) certification and improving market access for palm oil products.
Recognizing that challenges vary across regions, GCP supported local governments to develop context-specific RAP SPOs, including in Jambi, North Sumatra, Riau, and West Kalimantan, as well as selected districts.
Beyond policy, GCP helped establish the NAP SPO Implementation Team, strengthening inter-ministerial coordination and stakeholder engagement through dedicated working groups. At subnational level, RAP SPO financing has been supported through the palm oil revenue sharing mechanism regulated under Ministry of Finance Regulation No. 91/2023.
Strengthening multi-stakeholder collaboration in key commodity sectors and production landscapes.
Sustainable agricultural commodity production systems enhanced through effective multi-stakeholder collaborative action.
Output 1.1 Multi-stakeholder Collaboration for NAP SPO
Shared vision and action agenda developed, implemented and monitored through multi-stakeholder collaborative action for sustainable agricultural commodity production in the target landscapes and jurisdictions
Output 1.2 Policy, regulatory, institutional and incentive frameworks strengthened
Institutionalization of NAP SPO frameworks at national and subnational level and strengthened the environment for durable sustainable production strengthened through capacity development, partnership building, improved M&E systems, and enhanced communications
Output 2.1: Facilitation and systems change capacities developed through interactive training sessions and learning exchanges
Output 2.2. Technical and strategic advisory support delivered to align dialogues with co-creation of technical interventions that influence sustainable production
Output 2.3: Partnerships with private sector companies and initiatives strengthened to increase collective action within and beyond supply chains
Output 2.4: Communications and knowledge management enhanced, highlighting the benefits of multi-stakeholder collaborative action and promoting gender equality, social inclusion and living income
Contact
For more information about the Sustainable Landscape Programme Indonesia, please contact Andi Armia Pratiwi, GCP Communications Associate at andi.armia.pratiwi@undp.org
