PALMOILMAGAZINE, PALANGKA RAYA – Amid the ongoing complexity of Indonesia’s palm oil governance, a bold proposal has emerged from Palangka Raya: the creation of a National Palm Oil Agency. This idea, put forward by Ombudsman RI member Yeka Hendra Fatika, isn’t just another policy suggestion—it carries a vision for a well-structured, efficient, and highly profitable industry, potentially generating up to Rp650 trillion annually for the country.
“If managed accountably and comprehensively, a National Palm Oil Agency could contribute an additional Rp650 trillion to state revenue,” Yeka stated, as reported by Palmoilmagazine.com via Antara, Monday (June 2, 2025).
This massive projection isn’t speculative. According to Yeka, the potential lies in increased productivity of smallholder plantations, higher CPO export prices freed from deforestation-related stigma, and greater tax contributions. For comparison, palm oil’s current national contribution stood at just Rp88 trillion in 2023—including Rp50.2 trillion in taxes, Rp32.4 trillion in non-tax revenues (PNBP), and Rp6.1 trillion in export duties.
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Managing an industry of this scale, however, is far from simple. Currently, palm oil policy is scattered across multiple ministries: Agriculture, Industry, Forestry, and Land Affairs/National Land Agency. This fragmented approach, Yeka argues, is the root of the sector’s persistent inefficiencies. Hence, the proposal for a new agency directly under the President is both logical and urgent.
“Malaysia has long operated the Malaysia Palm Oil Board (MPOB), which regulates their industry in an integrated manner. Their plantation area is much smaller than ours, yet their fresh fruit bunch (FFB) prices are higher and more stable,” he pointed out.
At the heart of Indonesia’s palm oil issues lies poor productivity among smallholders—averaging just 8–10 tons per hectare, while the real potential reaches 20 tons. The core problem: low-quality, uncertified seeds, used by an estimated 70% of farmers. Though replanting (rejuvenation) is the clear solution—and funding is available through the Palm Oil Plantation Fund Management Agency (BPDPKS)—implementation remains sluggish.
“Out of the 6 million hectares of smallholder plantations, only about 100,000 hectares are being replanted each year. That’s nowhere near enough,” said Yeka.
Land overlaps between palm oil plantations and forest areas further complicate matters, both domestically and internationally. These legal uncertainties not only depress Indonesia’s CPO prices on the global market but also make it harder to achieve international sustainability certifications like RSPO. The issue isn’t palm oil quality, Yeka emphasized, but chaotic governance.
To address these challenges, the government recently formed a Task Force on Forest Area Structuring (Satgas PKH). Though controversial for its military-involved approach (TNI, police, and prosecutors), Yeka sees promise in this new direction.
“If we leave this entirely to civil institutions, the issues never get resolved. The involvement of the TNI may reflect a more serious intention—to fix the palm oil sector from its roots,” he concluded. (P2)
