Policy on Mandatory ISPO Certification for Downstream Palm Oil Industries under Ministry of Industry Regulation 38/2025

Introduction

The Regulation of the Minister of Industry Number 38 of 2025 on Indonesian Sustainable Palm Oil Certification for Downstream Palm Oil Industries (“MOI Regulation 38/2025”) was promulgated on 12 November 2025 and will take effect on 12 May 2026. MOI Regulation 38/2025 was issued to implement further provisions under Presidential Regulation Number 16 of 2025 on the Indonesian Sustainable Palm Oil Certification System (“Presidential Regulation 16/2025”), by establishing the framework, principles, criteria, and certification procedures for the Indonesian Sustainable Palm Oil (“ISPO”) system, which is now mandatory for Downstream Palm Oil Industries.

 

Background

MOI Regulation 38/2025 was enacted to implement the mandate of Article 3 paragraph (4) letter b, Article 5 paragraph (3) letter b, Article 13 letter b, and Article 14 paragraph (3) letter b of Presidential Regulation 16/2025. Presidential Regulation 16/2025 states that the ISPO Certification system is required, in particular for the downstream industry sector that processes derivative palm oil products.

 

Key Provisions

Article 2 and Annex I: Certification Obligations and Scope

This provision requires Downstream Palm Oil Industry Companies to obtain ISPO Certification. This obligation applies to companies holding risk-based business licensing in the industrial sector in accordance with the Indonesian Standard Industrial Classification (KBLI) listed in Annex I. The KBLI scope includes, among others:

1. Crude Palm Oil (CPO) Industry (KBLI 10431)
2. Crude Palm Kernel Oil (CPKO) Industry (KBLI 10432)
3. Palm Oil Fractionation and/or Refining Industry (KBLI 10433, 10434, 10435, 10436)
4. Palm Cooking Oil Industry (KBLI 10437)
5. Margarine Industry (KBLI 10412)
6. Other Crude Vegetable and Animal Oil and Fat Industries (KBLI 10490)
7. Animal Feed Industry (KBLI 10801)
8. Basic Organic Chemical Industry from Agricultural Products (palm-based) (KBLI 20115)

Articles 3 and 4: Three Main Principles of Certification

ISPO Certification is carried out by applying 3 (three) main principles:

1. Compliance with laws and regulations;
2. Traceability; and
3. Sustainable business improvement.

Compliance Criteria (Article 4 paragraph (1)) cover basic legal requirements such as company deeds and business licensing. Business Improvement Criteria (Article 4 paragraph (3)) cover product, environmental, efficiency, and performance aspects. Traceability Criteria (Article 4 paragraph (2)) require companies to trace:

1. ISPO Certificates of raw material suppliers (from Palm Oil Plantation Businesses or other downstream industries);
2. Fulfilment of the supply chain traceability model;
3. Origin of raw materials;
4. Composition of materials, processes, and transportation facilities.

Articles 6 and 7: Certification Bodies (LS ISPO)

Certification may only be conducted by Indonesian Sustainable Palm Oil Certification Bodies (“LS ISPO”) accredited by the National Accreditation Committee (KAN). LS ISPO is responsible for conducting conformity assessments, issuing, suspending, or revoking ISPO certificates, and conducting surveillance. LS ISPO is prohibited from providing training, assistance, or consultancy services related to ISPO Certification to avoid conflicts of interest [Article 38 paragraph (3)].

Articles 8 and 9: Certification Application Procedure

Applications are submitted electronically through the ISPO information system. Companies must upload several administrative and technical documents, including (but not limited to):

1. ISPO Certificates from raw material suppliers;
2. Deed of establishment and business licensing (KBLI);
3. Production process flow diagram;
4. Quality management system certificates (ISO 9001) or food safety management system certificates (ISO 22000), or a “self-declaration” of the implementation of such systems;
5. Trademark certificates (if the company owns a mark). Proof of trademark registration may be accepted temporarily if the certificate has not been issued, but the original certificate must be available at the second surveillance stage.

One certification application applies only to 1 (one) production location.

Articles 13–19: Certification Audit Stages

The certification process consists of several stages, as follows:

1. Stage 1 Audit (Article 14): Examination of the completeness and conformity of legal documents, facilities, and production process flow. This audit is completed within no later than 30 calendar days.
2. Stage 2 Audit (Article 15): Conducted no later than 30 calendar days after completion of Stage 1. This audit consists of field verification to assess practical implementation of ISPO principles and criteria, as well as employee competence. This audit must be conducted during an active production process or through simulation. This audit is completed within no later than 60 calendar days.
3. Decision Making (Article 19): LS ISPO must issue a decision (granting or rejecting the certificate) no later than 14 calendar days after the Stage 2 audit report is completed.

Articles 20, 21, and 22: Validity Period, Logo, and Renewal

The ISPO Certificate is valid for 5 (five) years. Certified companies must display the ISPO logo and electronic mark on each product package. For renewal (recertification), companies must apply no later than 1 (one) year before the certificate’s expiry date.

Article 25: Surveillance Obligations

The LS ISPO that issued the certificate must conduct periodic Surveillance Audits. The first surveillance is conducted no later than 12 months from the certificate issuance date, and subsequent surveillance audits must be conducted every 12 months after the previous one.

Annex II: Detailed Assessment Criteria

Annex II contains a matrix on assessment procedures and serves as a guideline for LS ISPO auditors. For example:

1. Supplier Traceability (Point 2.1.b.1): To be deemed “Compliant,” companies must not only show valid ISPO Certificates of suppliers, but must also have agreements or cooperation contracts requiring suppliers to hold ISPO Certificates.
2. Supply Chain Model (Point 2.2): Recognized supply chain models include: Mass Balance, which allows mixing (with at least 20% ISPO-certified raw materials); and Segregation, which requires 100% ISPO-certified raw materials with no mixing allowed.

Sanctions

Articles 41–44: Administrative Sanctions

Downstream Palm Oil Industry Companies that do not comply with the ISPO Certification obligation will be subject to administrative sanctions. Sanctions are imposed gradually, consisting of:

1. Written warnings: Provided up to 2 (two) consecutive times, each with a period of 30 calendar days;
2. Administrative fines: Imposed if written warnings are disregarded;
3. Temporary suspension of business activities: Imposed if administrative fines are not paid. During suspension, companies are prohibited from conducting production activities.

If the regulations on administrative fines are not yet available, temporary suspension may be imposed immediately after failure to comply with written warnings.

 

Transitional Provisions

Article 47: Status of Existing ISPO Certificates

ISPO Certificates already issued for downstream industries before MOI Regulation 38/2025 enters into force remain valid until their expiry dates. However, companies holding such certificates must apply for renewal based on the new provisions under this Regulation, no later than 1 (one) year before the expiry of their existing certificate.

 

Closing

MOI Regulation 38/2025 expands the mandatory ISPO scope from the upstream sector (plantations) to the entire downstream supply chain. Although the Regulation comes into force on 12 May 2026, the mandatory ISPO Certification requirement for downstream industries will only take effect on 19 March 2027. This provides a grace period for industry preparation. To obtain certification, downstream industries (such as producers of cooking oil or margarine) must ensure that their CPO/CPKO suppliers are already ISPO-certified.