|The rapid growth of palm oil plantations has been blamed for the destruction of tropical forests that are home to many endangered species, and forest fires that occur every year during the dry season due to illegal slash-and-burn clearance AFP/JANUAR
The moratorium effectively halts any new land being made available for plantations in the world's top producer of the edible vegetable oil, a key ingredient in many everyday goods, from biscuits to shampoo and make-up.
President Joko Widodo signed the instruction, which will last three years, on Wednesday, Prabianto Mukti Wibowo, a deputy minister at the Coordinating Ministry for Economic Affairs, told AFP.
"(The moratorium) is to improve the governance of sustainable palm oil plantations, provide legal certainty, increase the productivity of smallholder palm oil plantations, maintain environmental sustainability and contribute to the reduction in greenhouse gases," he told AFP in a WhatsApp message.
Plantations on Sumatra island, Papua and the Indonesian part of Borneo have expanded in recent years as demand for palm oil has skyrocketed, bringing huge profits to companies and healthy tax revenues to the government.
But the rapid growth has been blamed for the destruction of tropical forests that are home to many endangered species, and forest fires that occur every year during the dry season due to illegal slash-and-burn clearance.
The Indonesian Forum for the Environment, Walhi, welcomed the moratorium.
"The presidential instruction is a good first step in restructuring natural resource management, especially in the palm oil sector," it said in a statement, adding ideally it would be in place for 25 years.
The moratorium was first proposed in 2015, following devastating blazes that cloaked large stretches of Southeast Asia in toxic smog for weeks.
A moratorium on conversions of new peat lands was established in 2011 to improve management and reduce fires, but campaigners say this is sometimes ignored when local governments grant concessions.
Poor spatial data and overlapping forestry maps are a major hindrance for authorities trying to enforce regulations governing them.
In 2015, the government banned new development on all peat lands after swathes of carbon-rich peat were drained for use as plantations in recent years, creating highly flammable areas.
The decision comes as Indonesia and Malaysia battle a move by the European Parliament to ban the use of palm oil in biofuels.
It voted earlier this year voted in favour of a draft law on renewable energy that calls for the use of palm oil in biofuels to be banned from 2030, amid mounting worries about its impact on the environment.
Indonesia and Malaysia will be hard hit as they are the world's top exporters of palm oil.