The expansion of the forestry and plantation sectors in Indonesia over the last two decades cannot be separated from the increase in conflicts over land use and natural resources, as well as the awareness of the social, economic and environmental impacts of these conflicts. Therefore, land-based business activities must also include conflict management efforts, ranging from limited and local disputes, wider land use conflicts, to land management cases that require judicial resolution in accordance with relevant regulations and policies. The term “agrarian conflict” is more commonly used than land conflict because the term refers to a broader issue of natural resource management.

Agrarian reform was considered a top priority of Indonesia’s national reform agenda in 1998. In 2001, the People’s Consultative Assembly (MPR-RI) issued TAP MPR-RI No. IX/MPRRI/2001 on Agrarian Reform and Natural Resource Management, which aimed to address agrarian conflicts and tackle two related problems, namely inequality in land tenure and natural resources, and severe environmental destruction. The MPR decree emphasizes the view that the resolution of agrarian conflicts cannot be separated from the implementation of agrarian reform as a whole, and that conflict resolution should be seen as both a means of resolving individual property rights, and as an effort to ensure redistributive justice for citizens.

A World Bank study published in 2014 reported that nearly 25 million hectares of all designated forest areas – more than 20 percent of the total forest area, covering nearly 20,000 villages – are in conflict due to competing legal claims. A 2017 study on the costs of conflict in the palm oil sector concluded that “the cumulative costs of social conflict are significant, underappreciated, and can pose serious risks to investment outcomes.” The direct costs of these conflicts ranged from USD 70,000 to USD 2,500,000 per site, equivalent to 65% of the total operating costs per hectare, or 132% of annual investment costs per hectare. The report also notes that some of those costs are intangible, or “hidden”. Similarly, a study of the costs of conflict from a community perspective calculated the irreducible minimum household-level costs incurred as a result of conflict to be at USD 2,795.00 per household per year, with a slightly higher figure (USD 3,456.00/year ) for farmer households participating in the plasma plantation program.

In the context of climate change, conflicts over land and natural resources are important contributors to the problem of tenurial uncertainty, which in turn contributes to the acceleration of land use/cover change and deforestation. Therefore, effective resolution of land and natural resource conflicts is not only a key factor in achieving the national goals for equitable and sustainable development, but is also an important element in achieving Indonesia’s greenhouse gas (GHG) emission reduction targets, as expressed in the National Determined Contribution (NDC) commitments to meet the Paris climate agreement.

On May 16, 2016, President Joko Widodo adopted agrarian reform as part of the 2017 Government’s Work Plan, which was contained in Presidential Regulation (Perpres) No 45/2016. This Presidential Regulation outlines agrarian reform as a priority program which includes strengthening the regulatory framework necessary to resolve agrarian conflicts, improving land ownership regulations and agrarian reform, legal certainty and land legalization, community empowerment in utilization and production, and implementation of central and regional agrarian reform institutions.

One of the targets proclaimed by President Joko Widodo in his second term is to increase Indonesia’s competitiveness in the global economy through improving the investment climate. Accelerating the resolution of agrarian conflicts and natural resources is one of the prerequisites for achieving this goal. In this regard, President Joko Widodo issued Presidential Regulation No. 86/2018 concerning Agrarian Reform. In this Presidential Decree, it is stated that the implementation of Agrarian Reform is carried out by the Central Government and Regional Governments on Land Objects for Agrarian Reform (Tanah Objek Reforma Agraria/TORA) through the following stages: (a) Agrarian Reform planning; and (b) implementation of Agrarian Reform.

Meanwhile, the private sector is increasingly recognizing the need to create more inclusive business models. The Conflict Resolution Unit (CRU), an initiative of the Indonesian Chamber of Commerce and Industry (Kamar Dagang dan Industri / KADIN), aims to contribute to the improvement of the investment climate for land and natural resources by reducing risks associated with conflict . The CRU initiative began at the end of 2015 and was incubated through the Indonesia Business Council for Sustainable Development (IBCSD), to become a conflict resolution service agency that provides effective, independent, and reliable support for resolving conflicts in the management of agrarian and natural resources.

CRU provides support for program efforts which include: (1) Promoting mediation as an effective approach to resolving agrarian and natural resource conflicts; (2) Provide a credible source of information on conflict resolution, while encouraging a more sustainable approach to agrarian and natural resource management; (3) Sponsoring studies and studies on issues related to agrarian conflicts and natural resources; (4) Provide support for policy reform efforts through public policy mediation; and (5) Develop a sustainable institutional model for the provision of conflict resolution services.

During the period 2016 to 2019, CRU (in collaboration with 11 professional mediators, assisted by 36 interns) has handled a total of 56 conflict cases in the forestry and plantation sectors, in various locations, including Jambi, West Kalimantan, South Kalimantan, East Kalimantan, Java East, South Sulawesi, Southeast Sulawesi, West Nusa Tenggara, and Papua. Of the 56 cases, 23 were successfully resolved, with the parties signing an agreement to end the conflict. In an effort to resolve, twenty-two cases in Southeast Sulawesi, which were initially seen as location-based tenurial conflicts between communities and oil palm plantation companies, were improved through full public policy mediation, when it was indicated that the cause was overlapping in spatial allocations between the transmigration and forestry sectors. Beneficiaries of all these conflict resolution efforts include communities from 37 villages, 15 farmers’ organizations, two indigenous peoples’ organizations, three oil palm companies, and seven companies holding forest production permits (Hak Pengusahaan Hutan/HPHs).

The challenge now facing CRU is to build its experience and reputation by developing an institutional design that focuses on the resolution of agrarian conflicts and natural resources and is truly independent and impartial. The CRU remains committed to the goal of resolving ongoing agrarian conflicts, while also contributing to national efforts to gain greater clarity over land rights and ensure sustainable management of the vast lands currently in conflict.