Palm Oil Plantation Based on Community of Indigenous People

BOT scheme or stock scheme can be an alternative partnership development of community-based oil palm plantations.

Some regions in Indonesia have communal land tenure institutions, such as customary lands. The areas of West Sumatra, Kalimantan and Papua, for example, have a communal land tenure system that is hereditarily owned by indigenous people. If the community wants to develop oil palm plantation in this area, with such a system of communal land tenure, it can not be executed with the scheme of core estate and smallholders, that is also known as PIR (Perkebunan Inti Rakyat), which requires individual ownership of farmers.

In rural communities with such communal land tenure systems, it is also unwise if the communal land is distributed to individual farmers as it will create horizontal social tensions within the indigenous people. It is also unwise to sell the land to oil palm investors, as indigenous people’s culture will be uprooted and it will create an agrarian social conflict in the future.

In such a communal land tenure system, if indigenous people want to develop oil palm plantations, it is still possible to develop schemes of partnerships between indigenous people and private corporations or state enterprises. The following two community-based palm plantation partnerships can still be developed if people want to own oil palm plantations.

First, partnership with Build-to-Transfer (BOT) system. The communal land still belongs to indigenous people and no land transactions from indigenous people to private companies or state-owned enterprises. The indigenous people’s palm plantation is built by private or state-owned companies with subsidized credits (credit subsidies financed by village funds) and directly handed over to indigenous people. The management and maintenance of oil palm plantations are done by the indigenous people themselves, with guidance from private or state-owned enterprises, while the results in the form of fresh fruit bunches can be sold to private or state-owned palm oil mills that exist around. In the long term, cooperation between several indigenous communities can also help the people have their own palm oil mill so that the output sold is in the form of CPO.

Second, oil palm stock scheme. Communities of indigenous people who have communal land, in cooperation with private or state-owned enterprises, develop oil palm plantation including the palm oil mill. Indigenous people participate in shares of land (inbreeng) while partners (private, state-owned) provide capital to build oil palm plantation and the palm oil mill. Indigenous representatives also participate in the Board of Commissioners and Directors. Indigenous people participate as laborers in the maintenance of the plantation and the daily operations of the mill according to their competence.

Both schemes of community-based palm oil partnerships have advantages. Indigenous people do not lose their communal land and private sector / BUMNs do not need to spend much money to acquire new land. Indigenous people enjoy the “economic pie” either in the form of individual wage as a labor, which is enough to support his life every month. In addition, indigenous people also enjoy income in the form of dividends (stock scheme) or profits (BOT scheme) that can be distributed, either for the common good or individually distributed, to the  members of indigenous people.

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