Indonesia is the world's biggest palm oil producer and environmentalists blame much of the country's forest destruction on land clearance for the crop

JAKARTA, Sept 21 (Reuters) - Indonesia's government has issued a presidential instruction to place a moratorium on new permits for palm plantations for three years, as part of efforts to protect forests, a presidential official said on Friday.

With around 12 million hectares (46,000 square miles) of palm plantations, Indonesia is the world's biggest palm oil producer and environmentalists blame much of the country's forest destruction on land clearance for the crop.

The instruction, which was signed on Sept. 19, aims to "improve governance of sustainable palm plantation, provide legal certainty, (and) guard and protect environmental preservation," according to a copy of the document verified by presidential staff member Ahmad Erani Yustika.

Indonesia's government has already put in place a moratorium on primary forest and peat land clearing, which has been regularly extended since it was first implemented in 2011.

The latest rule on palm plantations also includes freezing new permits that are currently being processed.

The government will also evaluate long-standing permits that have been issued but not yet implemented, including permits issued despite plantations being in forest areas, the document showed.

An industry body said the new measure could cause problems for some palm companies if their existing permits were evaluated based on the more recent government plan.

"We need to see historically, what the policy was when the permits were issued," said Eddy Martono, a senior official at the Indonesia Palm Oil Association.

The moratorium is also aimed at encouraging farmers to increase palm yields on land already being cultivated.

Indonesia has suffered one of the highest rates of deforestation in the world - often cleared for palm oil and other plantations or pulp and paper mills.

In the last half century more than 74 million hectares of Indonesian rainforest - representing an area twice the size of Germany - have been logged, burned or degraded, according to Greenpeace.

In 2015 alone, the World Bank has estimated that 2.6 million hectares of land in Indonesia was destroyed during 2015 forest and peatland fires, causing $16 billion of damage. (Reporting by Bernadette Chrisitna Munthe, Agustinus Da Costa and Fransiska Nangoy; editing by Ed Davies and Richard Pullin)

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