Improving Land Productivity through Fiscal Policy: Early Insights on Taxation in the palm oil supply chain

Angela Falconer, Tiza Mafira, Guntur Sutiyono
Climate Policy Initiative

As the world’s leading producer, palm oil makes a significant contribution to Indonesia’s economy in the form of tax and export revenues as well as employment
and infrastructure development. This study finds that the Indonesian national tax system as it stands is not incentivizing sustainable land use models in the palm oil industry. With these findings in mind, we identify several opportunities to modify the tax system in order to incentivize higher productivity models of palm oil land use and production.