 So these are the five key dimensions that we are looking into, and I can elaborate later if you want to further explore and understand how we systematically mainstream this green growth in development planning. Thank you. Thank you very much, Anna, and I'm just going to stand here for a final bit. I also wanted to thank Piers for drawing attention to the fact that it is on and talking about investment and opportunities to scale up responsible practices in the Indonesian palm oil sector without having a producer on stage. We did have one who, until a couple of days ago, was actually intending to participate in the symposium but for emerging issues within the company. It was unable to join. I have made an effort to reach out to a number of companies that I work at, democratic consulting base here in Indonesia. We work with a number of leading palm oil producers in Indonesia. We reached out to a number of those for commentary on some of the key issues that we will be talking about and I will make reference to some of the inputs and comments that we've gotten from them through the course of our discussion today. I would, however, also like to echo Piers' invitation to the audience among us. I can't see up to the crowd so clearly today but if there is anyone in the audience, is a producer who would, I encourage you to participate very actively in our discussion today. Okay, thank you very much everyone. We're a bit behind together so we're going to run right into our questions that we prepared for today. Again, broadly speaking, we have two sets of issues that we want to tackle, looking at community development and smallholder participation and beneficiary in palm oil and also broad range of issues related to planning and mitigation of environmental impacts. We've separated those somewhat artificially for part of the discussion although they're going to be woven together as questions carry on. But I want to begin by making an observation that palm oil companies potentially contribute positively to communities in three very broad areas. Number one is through the rolling out of successful smallholder programs for communities that are brought into the palm oil production process. Second is through contributions to livelihoods that are achieved through the construction of the development of infrastructure, development of market linkages, direct job creation and related livelihoods or programs. And the third is through the direct provision of social services. Now, the question that I'd like to ask our panel to begin is with these three areas in mind, what do you see as some of the main challenges faced by producers in making positive contributions to local community development even when they are genuinely committed to the task of doing that? And to begin, I'd like to direct that question first to peers and then to have you follow on with that entrance. So we're talking here about producers, we're talking predominantly about palm oil plantation companies, we're talking upstream here, who in my experiences based here predominantly in Indonesia who face a number of significant business related challenges in terms of working in the Indonesian environment in oil palm. Without going into a huge amount of detail, I guess probably one of the two major problems that the plantation faces is the relationship between land rights, land tenure and legislation or a land law that exists in Indonesia with the decentralization of Indonesia that occurs. The most important thing is to be certified. I think as we see the certification world first came out and it was RSPO and then after that came the U.R. and after that came the U.S. requirement and after that came the ISPO and it seems like all of these requirements have come on top of everybody and even though suppliers such as big companies don't have much between meaning of the minority period, you see that the risk is that you have about 41% mobile and Indonesia which might have a catching up effect. There's a lot of people like Darida, IDH, there are SMBs and everybody else who is offering tiny small orders but the way it is is that the buying from bigger companies you see that in Indonesia the small orders will have to live up to the bigger Indonesia. It's not like in Malaysia where Malaysia has fell down here because the small orders are selling to a bigger company. So I think really increasing sustainability requirements and all these market demands and all the other demands from everybody else on sustainability we cannot ask this question whether these small orders is a big portion of the music and a catch up requirement and if it can catch up, who is going to help them? Is it the responsibility of the foundation? Is the government playing a role? How can the NGOs help them? So I think we are talking directly and the small orders are the biggest portion of the foundation industry and we have to think about how can we include them in the global market to make them a bigger spread? Thank you, Adrian. We are going to spend about at least 10 minutes talking about small orders in Indonesia and I think the benefit of the audience some of you may know this very well already many of you may not. Speaking about small orders it's very important to understand some of the heterogeneity that we have within that. Very broadly speaking small orders in Indonesia fall into two broad classes. They are independent, truly independent farmers with no ties of any kind to a company free to sell their fresh fruit bunches to whoever they wish. Another class are small orders who have tied two companies through credit and contractual arrangements. Now the variety of these contractual and these partnership arrangements between small holders and sponsoring companies in Indonesia are incredibly diverse. They have changed markedly over time but broadly speaking today in Indonesia there are two different models that we see predominating most of the market in these relationships between companies and small holders tied to them. So I'm going to ask peers very quickly to take a moment to describe these two different models that predominate most of the partnership arrangements in Indonesia today and then we're going to explore that a little bit. Okay, sure. I'm going to keep this quite brief. But certainly echo what you've said about the fact that although there may be two broad groups in essence in reality in the field there is a far greater efflorescence there's a far greater diversity of the types of partnerships that occur in a modern day oil palm plantation and that's come about because of legislation from 2004 and it's come about from legislation in 2007 so I'll spend a bit of time perhaps talking about that notion in Indonesian is known as which is partnership plantations rather than focusing on the past. In the past since the 1970s there's been a whole gamut of plantation arrangements relating to what's known and most people I think in the room would know about that idea of inti plasma which is a relationship between a company generally with a mill which has its own land surrounding plasma or small holder plots of various forms and throughout the 1980s there was a whole range of plantation arrangements schemes known as Kier Kieretrans and Kieribun Kierekselavasi these are all iterations of that general plantation arrangement through the 90s you moved into this Indonesian term of Kakapea which is more of a what we would term in English I guess a shareholding arrangement or arrangement whereby small holders are tied to a particular plantation in terms of their FFB their fresh fruit bunches going to a mill but that was quite a change in terms of the traditional Kierek plantation arrangement and then you had these notions of commitraan partnership or revitalisation of plantations which bring us up to the last 10 or 15 years or so which develop a diversity of land division arrangements profit sharing arrangements and so on and so forth and you do get tremendous diversity even within districts in terms of plantation arrangements so you may have a particular road for example on the left hand you may have a government plantation that is still using a system of what's known as peer trance or trans migrants who were moved from Java or other areas in Indonesia populated places to work on plantation companies in Sumatra and Kalimantan and then literally 5 metres across the road you'll have a more modern form of commitraan or partnership whereby you'll have a shareholding arrangement where a plantation will actually undertake all the work in a short process and then the smallholder will have given up a proportion of the land and then they will receive a monthly income cut with administration costs transportation costs fruit grading costs and credit costs which have to be paid back and that will be their contribution and their income that they receive on a monthly basis thank you Chris so we have broadly speaking today farmers that actively participate in the production of fresh fruit bunches online that they make available to companies for planting oral palm another is in which they permit oral companies to develop other land and receive an exchange for that basically a dividend paid on a roughly 2 month basis minus all of the expenses and costs that Pierce had preferred to I've in thinking about question of investments that can be mobilized to overcome some bottlenecks that are part of making smallholder smallholder programs successful in Indonesia so what I have in mind here is in this class of smallholders who are tied to plantation companies that can support the success and development of those programs one thing about what sorts of investments can be mobilized to to improve performance of those arrangements I've asked a couple of producers on learning database which you can actually share since this is a company based it will definitely be quite difficult because I think one of the biggest question that needs to be answered as well is that if we have plasma covered by all these operations what happens to think that means that some kind of investment is proof of infrastructure and also how to train all the doing the right thing because doing the worst parts of the pump in the city in the public for example once that we get it from cities and poor areas once we get it from couldn't they suggest to train in forestation everything else bigger public companies claim that they're not doing it and all the agencies how about the other small farmers that are doing it how do we actually how do we invest and to make sure that some kind of responsibility is given to make sure that they are doing some kind of investment scheme that's kind of lacking in that area I think that's interesting Thank you very much Adrian I want to pose another question that links to aspects of what you just talked about Adrian the past two, three years have seen several smallholder groups become RSBO and ISICC certified both smallholders are fully independent but find support from sponsorships and companies and also smallholders who are tied to producers themselves so this trend towards smallholders becoming certified is a very positive sign but frequent observation made by companies and also groups who work with smallholders is that it's incredibly costly requires the direct fees are sizable but also the technical skills and training in the capacity is required in order to bring production up to the standard certification and also to go through that process are very costly and a number of people have put forward the idea that what we need then in order to stimulate broader participation of smallholders within the certification movement is innovative financial mechanisms to mobilize funding that are not necessarily dependent upon sponsorship of companies between the small and the middle type Ben, as a representative if you will the financial industry I'd like to ask it's a really interesting one because it's so very very close to impact investing and I think there that's a really fascinating space that we'll see, I think the international banks even moving increasingly towards to the sort of slightly bigger local and regional banks do a little bit more retail banking and of course you're going to find those banks active dealing with SMEs so there's quite a distinct market there and then you get up to some of the some of the international banks with very big retail banking presence HSBCs and so on so there's quite actually a lot of distillation but I really think that a lot of the real exciting work is happening in the kind of microfinance and actually impact investing area a lot is happening at the bottom of the pyramid I think a lot of this is really being focused on social causes but we're starting advocacy also conservation becoming a little bit more mainstream into that so not so much a huge amount happening at the moment in terms of the products research is ongoing and Swiss has done some research on this early this year I think you'll see quite a lot more activity and innovation in this particular space in the coming a few couple of years Great, thank you very much Ben Adrian I'm going to assume that you heard that and I'm going to put one quick question to you I know that Neste has been involved in providing support and as I understand direct finance in some form to the certification of independent small holders is this do you see a niche function that can be scaled on the downstream buyer side of things to provide finance and support small holders becoming certified it's a model that can be done but the thing is that we're the only buyer that's buying these certified oil so that's quite difficult so we did it for the first batch of small holders to find to us we we paid for the certification I think that model is quite doable it's basically having a willing meal that's made to be certified and includes a meal which has a good relationship with their small holders but there are small holders or plasma holders so that was a good scheme all together however I think the most important thing as you mentioned and also Ben mentioned just now is also the involvement of financial institutions I think the interesting especially if you come to other small holders which are more important to come to these small holders and have some kind of financing or trading there are institutions with money we all know that one thing is to buy the certified oil and actually who is the downstream player that's willing to do it so I think it's always easier to certify your own statement that's sort of like independent as you said it's more challenging we're looking into projects that are going to be in this state we've been discussing with a lot of young stakeholders including NGOs and all of those so hopefully in some time this future will be announced thank you very much I'm going to at this stage we're at we're going to open this up to questions I've got a number of questions that I would still like to ask on the panel but I'm going to pause at this stage for a moment to open the floor to questions anybody have something I'd like to ask Environment Centre Malaysia one of the challenges that we're working particularly on the issue of heat, fires and transplantary pays as in region this is one of the major sources of that degradation and unsustainable management that we see is the small and medium scale development of oil palm on peat that's but the challenge obviously the large companies have the capability technically and financially to invest properly in proper water management but it's the small the medium scale operators where most of the problems of water management are and one of the challenges which is faced for those legitimate small scale operators how do they get access to the financial resources to invest in proper mechanization for land management and I think because of that gap everyone takes the cheap option which is set fire to everything and that will clear the land and that's giving the major problem that we're facing I think it can only be solved by having an effective mechanism to get the finance in the right way but in a managed way so I don't know whether the panel members can give a comment that's been comment about micro credit but it just needs to be not credit to anyone but credit in a controlled way that legitimate players with guidance can get resources for proper land development in peatland or rehabilitation of peatland areas which have already been opened up Thank you Ben I hope you don't mind I'm going to ask you to address this question initially I think what there is though is something of a paucity of local regional banks that would be sitting in that financing niche that may necessarily have oil palm standards and one of the challenges that we face as a block of financial institution members within RSBO is creating the giving the local and the regional banks to get a bit more involved there's quite a lot of outreach that's going on in that regard, it's slow progress I think at this point I would give a nod to OCBC which last year became the first Asian domicile bank to become a member of RSBO but you know given that we have 2,000 delegates at this conference I think you know there's banks here there's a lot of private sector interest companies we'd really like to do our bit through this conference and ongoing engagement as a block of institutions for RSBO to get the other local regional banks involved I think this is just critical and there's definitely a case of the tall poppy syndrome where you stick your head up particularly as a bank you get it knocked off so we also have to think about the incentives what would actually make a local regional bank get involved in an organization like RSBO what's in it for them we need to come up with good answers thank you this particular question it's drawing attention to a need for finance it's actually getting finance even from local sources, mesoscale finance makes you wonder if there might be an opportunity for partnership of some form between the private sector and local governments in the specific geographies that we're talking about where you could look at a facility that would be rolled out in support of the private sector making an effort committing to best practices in the way that they're developing plantations I don't know if you want to speak to that you don't necessarily just an observation that I could see that as one potential opportunity of getting over this limitation of collateral and reputation I would if I could take the opportunity I think it's very important if we're talking about the smaller and medium plantation companies and the problems that are being experienced in the field as the question came through it's absolutely critical not to forget ISPO in this ISPO if we are going to everyone in the room here needs to begin perhaps thinking about how are we going to support ISPO and the Ministry of Agriculture and the Department of Plantations engage in better management practices of a supply chain of palm oil from the end user all the way through to that plantation and ISPO is going to be that tool that is going to be able to and it relates also directly to Adrian's point about independence more often so the role that ISPO plays in this complementary to RSPO is going to be very critical in this and I was again heartened this morning to hear from members of Kadin about some of the plans of the Indonesian Chamber of Commerce to become involved in the smallholder training and smallholder engagement ISPO has been very clear in terms of legality of independent smallholders and supporting legal independent smallholders as a very important part and challenge of what they're going to do so ISPO is going to be a very critical part of this moving forward just one final point about banks as well is that the whole microfinance issue is always a very complex one regardless of the commodity but of course BRI have been working this for many many years in Indonesia for a hundred years, B&I have been working this, CIMB have been working in this a number of Indonesian banks have been working in this sort of field as well so and again this has been spoken about this morning of that creating those sort of banking products where you have lag times to allow for alternative or multi-cropping the lay time before plantations become mature and that's difficult for banks in terms of risk in terms of return on investment and country risk and things like that but there are certainly many people working in that field in Indonesia okay it's interesting I just want to make a quick observation that you're right there's no shortage of banks in Indonesia that have been doing micro-credit means of finance, there are many of them I guess what we're talking about is it's a new product for the MAP which is advanced credit support of small and achieving RSPLs or other forms of certification which isn't itself brand new and this is not, there may be million tens of hundreds of millions of dollars available for micro-finance in Indonesia itself this is an innovative product for banks to formulate that but of course as you well know there's that question immediately has to be asked if there is certification what's in for me as a small holder and that's a significant challenge we can't just presume the small holder in the middle of Central Kalimantan or Papua is interested necessarily in a certification process because that's not what they're interested in they're interested in a whole gamut about the things that other RSPLs can provide fair question Anna please I could add to this a little bit more as we've heard more from the private finance perspectives I think access to finance for the small holder groups is equally important coming from the government side as well through driving investments in government budgets, fiscal incentives to other financial incentives or even reward mechanisms that can encourage small holders to flourish more especially when they implement stable practices in their production on their lands so I think both are important of course the policy and the fiscal incentive is a long path but it's still extremely necessary for this more systematic change in driving how governments are investing in their lands and not seeing this as access to finance per se but more as an investment so you're getting returns out of this what are the returns the returns are for society and this is I think a very important part that we need to continue to work on to incentivize these right more sustainable approaches interventions in palm oil in the palm oil sectors as well as taking way perverse incentives that are currently in place so I think these are some very important things to think about as we move ahead very good point how to encourage involved government expenditure and support for these to meet these emerging financial needs seeing that as a form of investment that yields very real returns and direct monitoring currencies but in real benefits let's return to the floor if there is a second question that anyone would like to ask guys let's ask the panel when we talk about using financing to incentivize small voters for more sustainable practices whether from credit suites or from your experience are beyond the CARDIN case study which we heard from Bob Frankie this morning do you all know of other concrete examples of how financing whether the micro level or the other levels was used to incentivize sustainable behavior from from small voters? Adrian do you want to speak to that? At the moment the ISCO system is looking into how they can do more financing to their certifications and I think if we are looking into a government especially in Singapore is well much affected by hate I think it would be in the interest of the Singaporean and I hope this also to be a business council or a business federation at one point to actually talk with the ISCO and the Ministry of Agriculture to see how small people can invest in companies small voters to get certified more aware of what they have been doing Thanks Adrian we lost the audio but we heard what you were saying does anybody in the panel want to add any more to that? I guess you could do the one most qualified to speak to that Demonstrating Independent small voters particularly in Sumatra is the lack of good planting materials I was just wondering to what extent either government other agencies are actually getting to grips with that particular problem because inevitably small voters are going to be low if they are using difficult planting materials and accurate planting materials and the RFC study which has happened recently came up with some very difficult conclusions about the actual proportion of small voters in Indonesia independent small voters who had access to good planting materials I do think that's a very important point Great point Piers I know that you've done a lot of thinking and working on this way of need that will crash very soon amongst small holders in Sumatra poor planting material or solicit trees that are going to be looking at replanting very soon the question is how to localize that funding but also how to build into that arrangement perhaps some sort of a mechanism that would take into account that there are several years of zero income until the trees that are replanted become productive again so maybe I'll ask this if you first Ben have you heard discussions about this and speaking back Sure I don't have any great insights to this more generally banks will provide financing credit to all sorts of industries and the conditions that those industries find themselves in their ability to repay various internal and external factors again just go back to my point before I would have thought that the kinds of banks that would be there for those small holders would have been providing those sorts of tailor-made services for some time you know I guess the credit risk would change but provided the banks can foresee that their chances of being not going to be there then the private sector will try its best to do the transaction don't know maybe the public sector maybe there's a role for the government the local districts in terms of some kind of underwriting or some kind of security I can't say too much more about that Okay well good thank you Ben Pierce or Adrian do you have anything you'd like to add to this question here's a good answer small holders independent small holders across Indonesia so that extension and that education is a critical part of that thank you Pierce Adrian anything very quickly you'd like to add to that in 30 seconds or less basically two points I think looking at the policies that we are looking into and as I mentioned before we need to be thinking further in terms of policies that drive investments to the right direction but building the case is not easy building the case in government because you're involving Ministry of Finance and others who are dealing with budgets and incentives so how do you build the case to make sure that it's convincing and this is what 3GI is working on with Government of Indonesia to work from behind and supporting them to build these cases to develop a systematic tool a tool that can help them see what are the current costs to doing business in this way specific to palm oil for example if you know forests are being cut down or fertilizers and pesticides pollute the waterways or other forms of actions that currently aren't taken which actually have a cost to the environment cost to society eventually and cost to the private sector as well or the smallholders as well because they are in that same environment so understanding that and understanding the lost revenue or the benefits that you are foregoing these are very crucial quantitative assessments that need to be done to help build the case and to help governments also see the value of putting an incentive into a certain direction doing a certain fiscal policy change or taking away a certain perverse incentive just reflecting a little bit on perverse incentives for example at the moment local district level local tax revenues that are being collected is mostly based on the area of the land now that obviously doesn't really help smallholders from really getting there because they are very much favouring large corporations as well it's also often based incentives are often also based on infrastructure so when large corporates come into this district they build the infrastructure it's often the case that the expectation is that corporations come and they support the building of infrastructure well then it obviously encourages these districts to encourage the bigger plantations and not look at sustainability across the board for their people in their district so how do you change those incentive mechanisms to actually encourage more smallholders moving into this space and not base your incentives on the size of the area, the land that you take more on land optimization or yield optimization so in this way you change your way of doing incentives at local districts level so these are some of the things and I think the key area that we work in if I come back to that now as you are questioning what we are doing the work very much looks at these costs and benefits so it's about building this case so with the palm oil we look at the interventions that you could take to put in place by moving to degraded lands, integrated pest management using organic fertilizers what are the opportunities in terms of revenue generation that it could create as well as the benefits that it would create to the private sector, the smallholder as well as the society, what are these if you can calculate this and if you can really build this case in that way that's strong that is aimed to drive the policy into that direction that's some of the work that we're working on great thank you Anna Sophia I just want to check by my watch I've got five minutes am I correct yes good, we're rolling at the same time here thank you Anna for that very distinct thanks for coming back to me if there is one question on the floor that can be asked in the next 30 seconds and it can be answered in one minute following that we're ready to ask that question right now anybody? there's a box on the hand I'm going to ask you some panelists one question ask each of you to answer it in roughly a minute it sounds like a bit of a cutesy question but I want to leave with a clear statement from each of you what you see as the major investment priorities and the question is if you had 10 to 20 million dollars that you could invest tomorrow in overcoming a key barrier bottleneck that you see in an area where innovation is necessary opportunities are available but there are constraints