Indonesia: We Will Honor Palm Oil Contracts Despite Huge Donations

Indonesia will honor palm oil companies’ existing contract despite its pledge to suspend new concessions to clear the nation’s natural forests and peat lands for two years, President Susilo Bambang Yudhoyono says.

In a historical bilateral agreement with Norway, Indonesia has pledged to have a two-year moratorium on new concessions to convert virgin forests and peat lands into plantations. With the agreement, Indonesia will receive US$1 billion in grants in phases from Norway to reduce emissions from deforestation and forest degradation.

This moratorium has raised questions about the expansion of palm oil businesses in Indonesia which, along with Malaysia, produces about 90 percent of the world’s palm oil.

But Yudhoyono easured that palm oil firms could continue to do business in the country.

“We have a policy to use degraded land … for the continuation of the palm oil industry in Indonesia,” he told a joint press conference with Norway’s Prime Minister Jens Stoltenberg during the Oslo Climate and Forest Conference at Holmenkollen Park Hotel Rica in the surrounding hills of Oslo.

Yudhoyono said he would ensure the palm oil industry could run their businesses as usual while the nation’s forests would be protected. “[There is] degraded land that can be utilized for our agriculture including palm oil,” the President said.

Stoltenberg said during the conference the countries involved pledged to provide a commitment of $4 billion between 2010 and 2012 to preserve the world’s forests, which was an increase from the $3.5 billion in Copenhagen in December last year.

“There was a new commitment from Denmark during this meeting,” he said without disclosing the figure.

Germany also joined the commitment by providing 350 million euros, said Stoltenberg. Other major contributors are the US, Norway, France, the UK and Japan, he added.

He said the money would come from the government’s budget. But he expected contributions from the private sector if the amount hoped to reach $30 billion by 2012, considering the large amount of budget deficit suffered by developed countries after the 2008 global financial crisis and amid the current Euro debt crisis.

“There is no way to get the money without mobilizing the private sector,” said Stoltenberg, adding that financier George Soros and businessman Bill Gates have expressed interest in participating in the global effort.

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