EUDR Postponement: A Wake-Up Call for Indonesia’s Commodity Governance

The European Union’s recent decision to propose a 12-month delay to the enforcement of the Deforestation-Free Regulation (EUDR) has sparked new conversations, especially for nations like Indonesia.

The postponement, officially announced on October 2, comes in response to concerns raised by global partners, including discussions at the United Nations General Assembly in New York. The key question now is whether this delay offers an opportunity for Indonesia to finally address long-standing governance issues in its commodity sectors — issues that have left the country vulnerable to such external regulatory shocks.

The Commission also stated that all technical implementation tools and equipment are ready, and it hopes that the additional time will serve as a phased period to ensure proper and effective implementation.

Based on this, all possibilities remain open, as the decision now rests with the members of the European Parliament and Council.

Indonesia’s response to the EUDR has so far been characterized by calls for delay and flexibility, citing the potential economic impacts and concerns over geospatial data transparency. However, the obligations set forth by the EUDR, such as traceability and proof of deforestation-free sourcing, are not new concepts.

The pressing need for better management of forests and commodities linked to deforestation has never been more evident. While the delay in EUDR’s implementation buys time, it also serves as a critical reminder: Indonesia must act to reform its practices. The EUDR could be the push that forces the country to improve forest management and commodity governance in a way that benefits both the environment and Indonesia’s long-term economic interests.

One of the most concerning issues is palm oil. Recent research by Sawit Watch reveals that while Indonesia has permitted palm plantations across 25 million hectares, about 7 million hectares remain unused, with much of this land located in the ecologically fragile tropical forests of Papua.

In 2022 alone, palm oil plantations were responsible for 56,000 hectares of deforestation, leading to the release of 142 million tons of carbon emissions. Indonesia’s climate commitments, including a pledge to reduce emissions by 31 percent, will become increasingly difficult to meet if regulations like the EUDR are not taken seriously.

It’s not just about environmental impact. From a governance perspective, the EUDR offers Indonesia a chance to reassess its commodity policies. For instance, the palm oil moratorium (Presidential Instruction No. 8/2018), once a glimmer of hope for better oversight, has since stalled, leaving millions of hectares of palm oil plantations in legal limbo. Approximately 3 million hectares of palm plantations are located within forest areas, while 1.4 million hectares of large-scale plantations still lack legal land rights (HGU). The EUDR’s legal due diligence requirements could prompt Indonesia to reinstate and enforce such crucial policies.

Indonesia’s continued reliance on an expansive, exploitative approach to palm oil plantations — often masked by greenwashing initiatives like the B50 biodiesel blend — could lead to further deforestation of 1,5 million hectares of natural forests, pushing the country closer to ecological disaster.

Our research shows that the maximum ecological capacity for palm plantations in Indonesia is capped at 18.15 million hectares. The Indonesian Geospatial Information Agency states that the current area of palm plantations in Indonesia is already at 17.3 million hectares. This means that the ambition to expand just one product — biodiesel — could lead Indonesia toward its own climate apocalypse.

From a geospatial perspective, Indonesia’s Geospatial Law does not actually prohibit the sharing of mapping information as long as it is not used to disclose national boundaries or vital national objects. The refusal to provide geospatial data by channeling information solely through the National Dashboard could, in fact, hinder Indonesia’s trade. Data and information-sharing practices have been implemented for decades.

During the EUDR Joint Task Force meeting held on September 12, 2024, representatives of the European Commission repeatedly stated that “the National Dashboard cannot replace the obligation of Indonesian suppliers to provide their spatial data […] that is not how the EUDR works.” In that formal meeting, the European Union did not confirm the acceptance of the National Dashboard as the sole source of trade information from Indonesia.

Despite Indonesia’s pushback, it’s clear that compliance with the EUDR is not an insurmountable challenge. Companies in Malaysia, such as SD Guthrie, have already demonstrated their readiness by shipping 40,250 metric tons of palm oil to European refineries, sourced from plantations and smallholder farms spanning over 102,000 hectares.

Similarly, major corporations like Ferrero, Mars Wrigley, Mondelēz International, Nestlé, and Tony’s Chocolonely have publicly opposed the EU Commission’s postponement, showing their commitment to moving forward with the regulation.

The lesson here is that delaying the inevitable will only hurt Indonesia’s economic and environmental standing in the long run. The European Parliament and its member states must stand firm in ensuring the EUDR is implemented without further delay or dilution.

It’s time for Indonesia to shift its approach and recognize that reforms in commodity governance are not just about compliance — they’re about safeguarding the country’s future. The promises of better governance made over the past 15 years must now be fulfilled.

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Tags: Roundtable on Sustainable Palm Oil, EUDR, Deforestation-Free Regulation, Indonesia, European Union, palm oil, RSPO