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Indonesia’s Palm Oil Landbank Expansion Limited by Proposed Moratorium and NDPE Policies


February 13, 2017
Indonesia’s proposed palm oil moratorium combined with buyers’ No Deforestation, No Peat, No Exploitation (NDPE) policies impacts industry growth potential. Within current concession areas, the moratorium adds regulatory risks to market access risks for companies that proceed with developing forests or peatland. Outside these existing concession areas, there is a material loophole in the proposed moratorium for land classified as ‘convertible production forest’ (HPK). However, this loophole is essentially closed by stranded land risks caused by NDPE policies. West Kalimantan has 2.2 million ha of land suitable land for palm oil development outside of its current licensed palm oil concessions. But, because of the moratorium and NDPE policies, at most 2.6 percent of this land is available for future viable oil palm concessions. Likely responses to NDPE market innovations and the moratorium are an increase in smallholder investments, industry consolidation and vertical integration.

Download as PDF: Indonesia’s Palm Oil Landbank Expansion Limited by Proposed Moratorium and NDPE Policies


The Chain Newsletter

The Chain: KLK’s Equatorial Palm Oil Obtains Five-Year Tax Holiday – Palm Oil Hides Risks, says ZSL

March 24, 2017
KLK’s Equatorial Palm Oil Obtains Five-Year Tax Holiday

Kuala Lumpur Kepong’s (KLK) Equatorial Palm Oil PLC gained a five-year extension to its tax holiday in Liberia last week. Equatorial Palm Oil trades as PAL the AIM market of the London Stock Exchange.

PAL’s tax holiday covers its Palm Bay and Butaw palm oil concessions in Liberia. It was initially applied for seven years. Liberia has extended the tax holiday because development is slower than planned.

Last September, PAL’s joint venture Liberian Palm Developments disclosed a $30 million loan from KLK Agro Plantations (KLK Agro). Proceeds will fund the next building phase of a 60-metric ton palm oil mill on the Palm Bay Estate, Liberia. Palm oil from this new mill will be exported by the Equatorial Palm Oil PLC subsidiary LIBINC Oil Palm Inc. facility at the port of Buchanan.

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About Us


Chain Reaction Research conducts sustainability risk analysis for financial analysts and investors. Our special focus is on sectors that deal with environmentally intensive commodities, especially those sourced from tropical regions like palm oil, and pulp and paper.<

We explore whether unsustainable corporate practices and actions have introduced unreported risks – and how or whether sustainability leadership can mitigate those risks and possibly provide competitive advantage. Where possible, we provide pre-IPO checking of claims about risk and assets reported in prospectuses. We also review claims made by publicly traded companies.

Chain Reaction Research has received support, in part, from the David and Lucille Packard Foundation, and from the International Climate and Forest Initiative (NICFI) scheme managed by the Norwegian Agency for Development Cooperation (Norad). Chain Reaction Research statements and materials do not necessarily reflect the standpoints of the Packard Foundation or Norad.


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