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In the Papua region, the expansion of the palm oil industry increased by up to 71% from 2011 to 2019, with the largest affected area located in Merauke regency. The objective of this research is to develop policy strategies with impact simulations related to economic, socio-cultural, and environmental issues for the sustainability of the palm oil industry with or without a moratorium on further expansion of land area. This study employs a system dynamics approach. The dynamic system is carried out through conceptual development, model specification, model verification, scenario development, and validity testing by measuring the absolute percentage error (MAPE). Model development and validation were carried out using PowerSim v.7 software. The policy scenario is simulated from the palm oil expansion policy beguan in 2018, until the research year ends in 2030. The validated results, forming the basis for simulations, exhibit high accuracy with a MAPE of less than 5%. The percentage deviations of 4.21% for production and 0.28% for land area is observed based on actual data from 2018 to 2022. The simulation of a 20% expansion scenario shows a significant increase in production to 1 million metric tons per year but also a 1.3% rise in waste generation, with an average waste volume of 350,000 tons per year. The expanded area will experience a 50% increase in the labor force to meet the higher production demand. The proposed comprehensive strategy includes regional contract regulations, diligent monitoring of land clearing, community empowerment, and indigenous peoples' involvement. It also promotes smallholder plantations, the utilization of waste for energy, and alternative markets for crude palm oil (CPO). Conversely, the dynamic model scenario with a moratorium on land expansion resulted in a production output of 600,000 metric tons, slower job market growth, and a 1.3% increase in waste generation, with an average waste volume of 195,000 tons per year. The strategy proposed uses proper waste processing, production adjustments, regulation of community rights and boundaries, resource development, and involvement of local palm farmers. These simulations offer valuable insights for sustainable decision-making, emphasizing the need to balance economic growth, environmental protection, and community well-being in the development of the palm oil industry. [ABSTRACT FROM AUTHOR]