Jakarta – Indonesia will delay the implementation of a regulation on industrial forests that would have allowed planters, especially those growing palm oil, to cultivate areas reserved for timber and other domestic raw materials.

The delay is aimed at making improvements to the proposed rule to make it consistent with previous decrees, and the government will issue the revised regulation as soon as possible, forestry minister Zulkifli Hasan said yesterday.

By classifying palm oil as industrial forest, it will be easier for investors to get land permits from the government, opening up larger forest tracts for palm plantations.

"This will harm many small scale planters, as big companies mostly have land bank in other usage areas that are not considered industrial forests," Bahana Securities analysts said in a note.

Indonesia, Southeast Asia's largest economy, is seen as an important player in the fight against climate change and is under strong international pressure to curb its rapid deforestation rate and destruction of carbon-rich peatlands.

The world's top palm oil producer has already revealed a long list of exemptions to its much-delayed two-year forest moratorium on logging that came into effect on May 20, in a concession to hard-lobbying plantation firms.

Green groups had opposed the proposed regulation, which was introduced last month, arguing that government permission for palm oil cultivation on industrial forests may be abused by some in the industry. But Zulkifli told reporters the regulation's suspension was not due to pressure from green groups.

"We have been applying the industrial concept for many years and it has been successfully implemented in the paper and pulp as well as plywood industries," he said. He added that currently, 30 per cent of Indonesia's wood production come from natural forests and 70 percent from industrial forests.