Buying an existing plantation: the due diligence that matters

Estates often change hands as a sale of shares in the company that holds them, because the right to cultivate (Hak Guna Usaha, HGU) and the licences are issued to that company and stay with it. You buy the estate’s history along with its palms: blocks planted outside the title, duties to smallholders left unmet, disputes with villages and fines that haven’t been billed yet.

So due diligence on a plantation is mostly a search for gaps between the papers and the ground. Each gap either comes off the price, goes into the contract or stops the deal.

Title, licences and what’s planted

Start with the land right. Have the HGU certificates checked at the land office, and list every mortgage (Hak Tanggungan) and block recorded on them. A lender with a mortgage over the HGU will have to be repaid or agree to release it at completion. Ask about pledges over the shares and other security too, since they don’t show on the certificate.

Then compare three areas that rarely match: the area in the plantation licence, the area under HGU and the area actually planted. Blocks inside the licence area but outside the HGU lack a legal basis, because a company needs both its land right and its licence to farm. Titled land left unplanted is a different risk, since an HGU holder may not leave the land idle. The article on permits and HGU sets out the full chain of documents to ask for, from spatial approval to the HGU decree.

Check the term of each HGU and when it falls due for extension or renewal. If your group already owns estates, check that the purchase keeps the company under the cap of 100,000 hectares of oil palm.

In an asset deal, the HGU has to be transferred by deed and registered at the land office, and the licences issued to the seller’s company don’t move with the land. That’s slower, which is one reason buyers usually take the company instead.

Forest areas and the task force

The biggest change since 2025 is the forest-area task force (Satgas PKH), set up under Presidential Regulation 5 of 2025. It can bill administrative fines, take back control of forest areas and recover assets in them. On 13 May 2026 it reported taking back close to 5.9 million hectares of forest area from the oil palm sector, much of it passed to the state-owned PT Agrinas Palma Nusantara to run.

For estates built in a forest area without any forestry permit, Government Regulation 45 of 2025, in force since 19 September 2025, has the task force take the area back once the fine is paid, and the land can go to a state-owned company. Paying doesn’t keep the blocks, and the fine is billed to the company you’ve just bought.

Check every block against the current forest-area map, including blocks outside the core title, and ask whether the company has had any notice from the task force or the forestry ministry. The forest area check explains how, and what release and the Job Creation Law’s settlement routes (Articles 110A and 110B) mean for an estate that’s already planted.

Plasma, people and land

The duty to help build community plantations on 20% of certain land stays with the company when its shares change hands. Ask how it was met: the agreements, the cooperatives, the regent’s decision on who benefits, the handover of the plasma blocks and the payments since. Then go to the villages and ask the same questions there. A scheme that exists on paper but pays little is a frequent cause of disputes.

Land conflicts need the same field work. Look for claims under customary (adat) law, village land letters that overlap the HGU, court cases in the Supreme Court’s public directory of decisions and complaints lodged with the district government. A certificate doesn’t end a dispute with a village that never agreed to the original land deal.

Labour is the other people question. Ask for the headcount by type of contract, the social security registrations (BPJS), the wage records and the state of worker housing, clinics, schools and water supply. Severance and other employment liabilities stay with the company in a share deal. Piece-rate work without social security is a known problem on some estates, so find out how everyone who works the land is employed, including people hired through contractors.

Certification, fire and operations

ISPO certification is mandatory for plantation companies under Presidential Regulation 16 of 2025, which replaced Presidential Regulation 44 of 2020. A certificate runs for five years, with surveillance audits in between. Ask for the certificate, the estates and mills it covers and the latest audit findings. If a certificate has lapsed, find out which finding the company couldn’t close.

Fire is the next record to check. Ask for the hotspot and burned-area history of every block, any sanction or court case that followed and the fire crew and equipment on site. Estates on peat carry the most risk, as peat and fire explains.

Then the operation. Find out where the fruit goes (the estate’s own mill, a contract with another mill or the open market) and how far it travels, on what roads. Look at the roads and bridges in the wet season, since a washed-out bridge stops the harvest reaching the mill. For production, compare weighbridge tickets and mill receipts with the block maps and planting years, and set fertiliser purchases against the yields claimed. Reading a plantation’s age profile covers what those records should show.

Before you sign

• Get the HGU certificates checked at the land office and list every mortgage, pledge and guarantee the company has given.
• Map every planted block against the HGU, the licence area and the forest-area map, and price the blocks that fall outside.
• Check the plasma record and the community agreements in the villages as well as in the data room.
• Ask for every task force notice, fine and court case, and for the ISPO audit findings.
• Write what you find into the contract as warranties and indemnities, a retention from the price until defects are fixed and conditions to be met before completion.