In 2010, Indonesia was estimated to have 7.8 million ha of oil palm plantations, making it the largest oil palm grower in the world. From these plantations, the country produced an estimated 27 million tons of crude palm oil in 2012 (USDA 2012). The expansion of oil palm plantations in Indonesia has been driven by rising global demand for vegetable oils. Palm oil imports by China, India and the European Union countries have increased from 15 million tons to 19.7 million during 2007–2012. Global imports of palm oil increased from 30.5 million tons to 39.4 million during the same...

As lands for plantations in Sumatra and Kalimantan became scarce, Papua has emerged as the leading candidate to accommodate oil palm expansion (Suebu 2009). Oil palm estates have been slow to develop in Papua, which is administratively divided into two provinces, Papua and West Papua. In 2007, Papua Province had an oil palm estate area of 29,736 ha spread throughout the districts of Jayapura, Keerom and Merauke; and West Papua had 31,374 ha in the districts of Manokwari and Teluk Bintuni (Dinas Kehutanan Provinsi Papua 2007).

By 2010, concession areas granted to oil palm companies in Papua Province had increased...

Boven Digoel District was formerly part of Merauke District in Papua Province and was established as a separate district in 2002. The district covers 26,838,800 ha. Before it was subdivided, in 2000, Merauke district government allocated 460,000 ha for plantations, mostly comprising forested areas, intended for 12 companies. However, of the 12 companies, only Tunas Sawa Erma (TSE) established plantations and continues to operate in 2013. The other companies have not yet begun operations, even though the Ministry of Forestry granted them permission to use the convertible production forests.

The 2010 census put the total population of Boven Digoel District...

This research draws on both primary and secondary data. Secondary data include official information from government agencies, corporate reports and public documents related to historical and statistical data on forest resources and plantation development, legal frameworks for investment and land acquisition processes and company licenses. Primary data were collected using Landsat satellite imagery analyses, household surveys, focus group discussions and key informant interviews. Household surveys examined individual perceptions of social, economic and environmental impacts of oil palm plantations.

For the purposes of the survey, the population was divided into three groups, based on their involvement in oil palm plantation operations:...

TSE started its plantation development project in 1995 and has experienced several changes in policies governing oil palm development investment and land acquisitions over the years. In the initial steps, to acquire lands and licenses, the company was guided by Law No. 12/1992 on Plant Cultivation Systems and Law No. 1/1967 on Foreign Investment. The Minister of Agriculture’s Decree No. 786/Kpts/KB.120/1996 on Estate Crops Business Licenses, further operationalizes Law No. 12/1992, which stipulates that plantation business licenses be issued by the Minister of Agriculture and remain valid as long as the company is in operation. Before the license is issued,...

Establishing oil palm plantations in less developed areas such as Papua can stimulate the local economy, generate employment and improve local infrastructure. The efforts by the Indonesian government to promote agricultural investment has encouraged oil palm developers to open plantations in remote regions with poor infrastructure and limited labor, 44 and unpredictable political, social and security situations (see also ICG 2007).

TSE has been a pioneer, initiating forestry and agricultural investment in this remote region of Papua. This has been instrumental in bringing about changes in the economy and livelihoods in Boven Digoel. Although the investment and management costs are...

Oil palm plantations play a major role in opening up isolated regions, contributing to state and regional revenues, stimulating the local economy, creating employment and improving infrastructure. As shown in this paper, plantation development has had a positive impact on opening up areas such as Jair Subdistrict and Boven Digoel District in Papua Province, creating jobs, improving workers’ incomes and stimulating the local economy. Villages adjacent to the plantations are also found to have better infrastructure and public facilities than other villages in the region.

The development of oil palm plantations has contributed significantly to deforestation in the district. This...