A policy analysis by Hasanuddin University finds that Indonesia's shift from gradual rehabilitation to stricter enforcement has not fully addressed the underlying drivers of oil palm expansion in state forest zones and has created new uncertainties for smallholder farmers. The study argues how sustainable forest restoration can only be achieved when environmental protection is pursued alongside social equity, secure livelihoods, and effective governance. These findings were made available online on June 13, 2026, and was published in Volume 189 of the journal Forest Policy and Economics on August 1, 2026.
To put these findings into context, Indonesia is the world's largest palm oil producer, with an estimated 3.4 million hectares of oil palm cultivated within state forest zones. As international pressure for sustainable palm oil sourcing increased, the Indonesian government has introduced policies to address oil palm cultivation in these areas.
One such approach was Strategi Jangka Benah (SJB) or "Rehabilitation Period Strategy," introduced in 2020–2021. Rather than immediately removing oil palm plantations, SJB allowed existing cultivation to continue for a transitional period while farmers gradually transformed monoculture plantations into mixed agroforestry systems. In early 2025, the government shifted toward stricter enforcement with Presidential Regulation No. 5/2025 (Perpres 5/2025), which introduced administrative penalties, potential criminal enforcement against violations, and state reclamation of forest land.
Shining light on these approaches, the research team led by Professor Muhammad Alif K. Sahide at the Forest and Society Research Group (FSRG) of Faculty of Forestry Hasanuddin University, Indonesia, examined how both approaches have struggled to reconcile forest restoration with the economic realities of smallholder farmers. They find that SJB faced implementation challenges because oil palm was deeply embedded in smallholder livelihoods, while the newer enforcement-oriented approach could create further uncertainty over land and livelihoods.
By engaging with stakeholders in Central Kalimantan and West Sulawesi, two regions where SJB was implemented, the researchers found a fundamental disconnect between the policy's ecological objectives and the economic realities facing smallholders. SJB promoted a gradual shift from monoculture oil palm to agroforestry but offered few economic incentives for farmers to make the transition. With palm oil remaining profitable and alternative livelihoods being limited, replacing productive plantations with slower-growing timber or food crops was economically difficult.
Similarly, Perpres 5/2025 frames forest reclamation primarily through law enforcement and territorial control, while leaving the implications for smallholder livelihoods uncertain. The researchers warn that reclaimed land could potentially become concentrated among state-owned companies or other actors with greater political, bureaucratic, or financial influence, potentially marginalizing smallholders further.
The researchers argue that SJB and Perpres 5/2025 reflect a fragmented approach to forest governance. SJB prioritized gradual rehabilitation and social inclusion, while Perpres 5/2025 places greater emphasis on law enforcement and state control. Neither policy, however, addresses the underlying drivers of forest conversion.
To break this cycle, the researchers call for a more integrated approach that protects forests while also addressing farmer's livelihoods, land rights, and economic needs. This would include clarifying who has legal rights to the land before imposing penalties, using social forestry programs to give smallholder farmers more secure land rights, involving local communities in forest restoration planning, and ensuring that they share in the benefits of restored land. The researchers also call for better coordination between the agriculture, forestry, and energy ministries so that policies on farming, palm oil, biodiesel, and forest protection work toward the same goals.
Overall, the study suggests that forest restoration cannot be separated from the livelihoods and land rights of the communities that depend on these landscapes. Without addressing land rights and economic needs, new regulations could create uncertainty without resolving the underlying challenges.
As Professor Alif puts it, "The challenge, then, is not merely to design better policies, but to build governance architectures that can navigate the inherent trade-offs between economic, social, and ecological goals in a transparent, accountable, and equitable manner."
Reference
Title of original paper: Policy forum: Between incorporation and reappropriation – The unresolved dilemma of oil palm in Indonesia's forest zones
Journal: Forest Policy and Economics
DOI: https://doi.org/10.1016/j.forpol.2026.103835
About Hasanuddin University, Indonesia
Hasanuddin University (Universitas Hasanuddin or Unhas) is one of Indonesia's largest autonomous universities, located in Makassar. Established on September 10, 1956, and named after Sultan Hasanuddin of the Gowa Kingdom, the university has grown into a major center for higher education with 18 faculties, including medicine, engineering, law, agriculture, and natural sciences. Its origins date back to 1947 with an economics faculty linked to the University of Indonesia. Today, Unhas focuses on advancing science, technology, arts, and culture, with a strong emphasis on the Indonesian Maritime Continent, aiming to develop innovative and globally competitive graduates.
Learn more, here: https://www.unhas.ac.id/about/
About Professor Muhammad Alif K. Sahide from Hasanuddin University, Indonesia
Muhammad Alif K. Sahide is a Full Professor at the Faculty of Forestry, Universitas Hasanuddin, and leads the Forest and Society Research Group. His research focuses on forest and land-use governance, community forestry, institutions, international environmental regimes, and bureaucratic politics in Indonesia. He actively contributes to forest policy and education across Southeast Asia through the ASEAN Social Forestry Network and national policy committees. Prof. Alif is also a founding and chief editor of Forest and Society and regularly supports research and writing capacity-building initiatives for young researchers and local organizations across Southeast Asia.
Funding information
Hasanuddin University
