Inequitable Legal Certainty in Indonesia's Twin Economic Pillars

The palm oil and mining industries are both pillars of Indonesia’s economy. However, there is clear favouritism in legal certainty from the government. For instance, PT Agincourt Resources has been granted concessions, with the government classifying it as a National Vital Object. Previously, President Prabowo Subianto, via the Forest Area Clearance Task Force (PKH), revoked the operating licences of 28 companies proven to have caused environmental damage (exacerbating major floods and landslides in Sumatra in late 2025), including PT Agincourt Resources, operator of the Martabe Gold Mine in Batang Toru. This was announced at a press conference at the Presidential Office in Jakarta on Tuesday, 20 January 2026. However, by March 2026, operational licences were reinstated, with production slated to resume in May 2026. Professor Dr. I Gde Pantja Astawa, S.H., M.H., a law professor at Padjadjaran University, said the disparity between the two industries stems from three factors. First, it is not about ‘strong versus weak’ industry associations. Instead, global narratives link mining to electric vehicles (EVs) and green energy. ‘That makes it easier to gain political support. Palm oil is tied to deforestation narratives, weakening its bargaining position,’ Pantja told detikX. Furthermore, there is a gap in legal frameworks: mining uses the Rapid Environmental Impact Assessment (PPKH-PSN) designed for speed, while palm oil is trapped under the 1999 Forestry Law and faces legal uncertainty. Despite palm oil supporting the economy since the 1990s, a new permit moratorium has been in place since 2018, and it is now affected by Presidential Regulation No. 5/2025 on Forest Area Clearance. ‘Thirdly, association coordination. Mining associations such as APNI and MIND ID have direct coordination channels with the Ministry of Investment and Ministry of Energy and Mineral Resources, while palm oil associations like GAPKI and APKASINDO are active but often fragmented between large companies and smallholders, lacking an equal negotiation table with the PKH task force,’ he said. The government, Pantja said, tends to back the mining industry, leaving palm oil to fend for itself. Thus, the government often counters criticism from researchers or civil society organisations, arguing that mining, such as nickel for EVs and energy transition, is crucial. Regulations like environmental impact assessments (AMDAL), PPKH, and rehabilitation funds show the government’s environmental concerns. ‘For palm oil, when attacked on deforestation issues by the EU, WTO, and EUDR, the government’s response is more defensive. Diplomacy exists, but domestically, palm oil faces double burdens,’ he added. Pantja described mining as being on a ‘facilitated’ path, while the palm oil industry faces ‘clearance’ measures. According to Indonesia’s Central Statistics Agency (BPS), the economy contracted 0.77% quarter-on-quarter in Q1 2026 compared to Q4 2025. Mining and quarrying saw the deepest contraction at 8.20%, while agriculture—including palm oil plantations as the largest contributor—forestry, and fisheries grew by 9.56%, the highest. Moreover, the structure of Indonesia’s GDP by industry at current prices in Q1 2026 showed no significant changes. However, agriculture, forestry, and fisheries accounted for 12.67% of GDP, larger than mining and quarrying’s 8.69%. Beneath these figures, palm oil entrepreneurs, who employ far more workers, are left stranded when renewing Right to Cultivate (HGU) permits. They are often obstructed by sudden changes in forest area regulations, bounced between ministries, and face criminal liability. This regulatory anomaly must be addressed effectively. Pantja stressed that forest area palm oil disputes should be resolved via administrative law, not criminal law. This is based on Articles 110A and 110B of the Omnibus Law on Job Creation and/or Government Regulation in Lieu of Law No. 2/2022, followed by Government Regulation No. 24/2021. ‘The legislative intent is clear: de facto, palm oil plantations existed before the Omnibus Law and held permits such as Location Permits, Mining Operating Licences (IUP), and STD-B, so administrative procedures should apply,’ he said. Additionally, palm oil entrepreneurs were given three years from the Omnibus Law’s enactment to meet permit requirements. Failure to comply within this period would result in administrative sanctions. ‘Since permits fall under administrative law, resolutions must follow administrative mechanisms with administrative sanctions, not criminal or corruption charges. Thus, criminal law should be the last resort,’ he explained. However, the PKH task force could be a double-edged sword. Blind enforcement risks damaging an industry that has long been an economic pillar. Mass layoffs, escalating financial burdens for farmers and companies, damaged investments, and reduced national CPO production are potential risks. This, Pantja said, could occur if administrative resolution is not prioritised.