Palm oil plantations are set to expand to degraded lands in Indonesia announced the Indonesian President yesterday.

JAKARTA, Indonesia (29 April, 2011)_Indonesian President Susilo Bambang Yudhoyono promises incentives and renews calls for businesses to develop the country’s degraded land to secure growth of palm oil and forestry products instead of expanding by chopping down trees.

The success of the program to bring companies to turn unproductive grasslands into high-yielding assets is “critical” to Indonesia’s efforts in becoming a green economy, Yudhoyono said in a speech in front of business people at the B4E Global Summit in Jakarta yesterday.

Indonesia, Southeast Asia’s biggest economy, is struggling to balance ambitious targets in both economic growth and fight against climate change. The government this month announced that the country aims to become the world’s 12th largest economy by 2025 with per capita income jumping more than five-fold to US$16,000.

“It is time for us to think a new of imaginative ways to resolve the monumental challenges that we face today and tomorrow,” Yudhoyono said. He didn’t specify what incentives the government will give to businesses, including palm oil producers, to use more than 25 million hectares of degraded land in Indonesia.

Providing industries with access to degraded lands is one of the key areas the government is working on to implement Reducing Emission from Deforestation and Forest Degradation (REDD) scheme, Kuntoro Mangkusubroto, Chair of the REDD+ Task Force, said in a statement yesterday after meeting palm oil companies. REDD+ offers one of the cheapest ways for cutting greenhouse gases emissions and slow the rate of climate change.

The industry “welcomes initiatives from the government” that will allow for expansion into areas that are “extremely difficult” to develop, said Joko Supriono, Secretary General Indonesian Palm Oil Producers Association (GAPKI), in the same statement. He didn’t elaborate.

Some non-profit organizations have started mapping out degraded land, namely damaged areas with low conservation value and carbon stocks that are unlikely to recover without help, in the country. The World Resources Institute, for example, has identified such areas suitable for palm oil plantations in West Kalimantan province.

More than 3 million people are employed in the Indonesian palm oil industry, which brings around US$16 billion of export revenues annually. Indonesia, the world’s second largest exporter of palm oil, is creating new policies to ensure that it can meet a self-imposed emission cut targets of 26 percent from business-as-usual level on its own by 2020 and 41 percent with international assistance.