PALMOILMAGAZINE, JAKARTA – The introduction of regulation by the central government aims to distribute profits derived from palm oil production among provinces and regencies/cities involved in the industry. This initiative is anticipated to spur growth in palm oil plantations and related sectors within these areas, potentially enhancing local welfare.
As outlined in President’s Regulation Number 38/2023 concerning Palm Oil Plantation Profit Sharing, the Indonesian government endeavors to alleviate fiscal disparities and mitigate negative impacts on palm oil plantation activities. To achieve this goal, the government has laid down guidelines for profit sharing within the palm oil sector.
This regulation is informed by considerations outlined in Chapter 123, paragraph (4) of Law Number 1/2022 regarding Financial Calculations between the Central and Regional Governments, as well as Chapter 5, paragraph (2) of the 1945 Constitution. Palm oil profit sharing entails the transfer of funds to both producer and non-producer regions based on specific percentages of revenue, expenditure, and performance indicators. These funds are intended to address negative externalities and foster fairness within and among regions.
Palm oil profit sharing derived from percentage allocation on export levy and export citation on palm oil, crude palm oil, and or its derivative products. Palm oil profit sharing is used through Rancangan Kegiatan dan Penganggaran Dana bagi hasil Perkebunan Sawit or RKP DBH Sawit for the rests.
RKP DBH Sawit is the plan of activity and budgeting that could be funded by palm oil profit sharing as same as the regulations/policies in the district in the same year. Through transfer ke daerah (TKD), the fund that derived from Budget and Expenditure should be allocated and distributed to the regions to be managed to fund the government’s maintenance that became the authority in the regions.
It is clear that palm oil profit sharing is part of TKD and deriving from the levy on palm oil, crude palm oil, and or its derivative products based on the regulation of minister about numbers of out fee and levy on palm oil, crude palm oil and or its derivaitive products namely about the numbers of export citation tariff.
The allocation of palm oil profit sharing was decided based on the revenue in one previous year until the end year – of budget. The allocation limit from palm oil profit sharing would be 4% from the revenue and decided by the government as the minimal palm oil profit sharing. Besides, the government could use other revenue with Budget and Expenditure mechanism.
Palm oil profit sharing that is distributed for the regions, used the percentages, as follow, the provinces got 20% allocation; producer regencies/cities got 60%; regencies/cities in borders with producer regencies/cities got 20%. The allocation was from the consideration of palm oil plantation areas, plantation productivity, and or other indicators that related ministers decided and derived from related ministries/institutions.
Referring to Chapter 6, Government’s Regulation Number 38 / 2023, palm oil profit sharing would be handed over based on the weigh up to 90% from the percentage of profit sharing and decision of producer regions, and 10% based on performance in the regions. While the performance in the regency/city to get palm oil profit sharing calculation is the performance to minimize poverty level, develop sustainable palm oil plantations, and or other performances.
It is important to develop sustainable palm oil plantations. What InfoSAWIT noted, it would be the basic to succeed the development and escalate plantation productivity in one region. That is why by implementing the best and sustainable palm oil practices, the successful development would always continue to get poverty alleviation in the society and welfare together.
Referring to sustainable development goals (SDGs) in national scale, palm oil issues that become the latest specter, such as, palm oil plantation legal, should be the main project for the regions to get solution through every available mechanism.
By having solution on the issue, the government could encourage to improve palm oil plantation governance through sustainable palm oil development based on ISPO principles and criteria which has become a national – scale certification mandatorily.
The successful ISPO certification achievement in one region could be the benchmark for the district performance in sustainable palm oil development and also in poverty alleviation. That is why the successful ISPO certification would directly deliver impacts to environment and social management around the plantations, escalate plantation productivity, and encourage the people’s welfare.
If the regions successfully develop sustainable palm oil plantations, Indonesia would be the biggest sustainable palm oil producer in the world and encourage law enforcement in national scale. It would implement the world – class sustainable principles and criteria.
It is the time to succeed sustainable palm oil development, as part of palm oil profit sharing. The success of sustainable palm oil development would encourage the images of palm oil as sustainable product in the world. Hopefully. (*)
By: Ignatius Ery Kurniawan / Editor in Chief
