Palm Oil Profit Sharing: Enhancing Governance for Positive Outcomes

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Illustration of Palm oil plantation. Photo by: Sawit Fest 2021 / Tiara Nur Fadilah

PALMOILMAGAZINE, JAKARTA – In 2022, the Government of Indonesia officially enacted Law Number 1/2022 concerning the Financial Connection between Central and Regional Governments. This law includes provisions on profit sharing, which serves as a crucial instrument to support development, particularly in the palm oil plantation sector.

To elaborate, the government issued Government Regulation Number 38/2023 on Palm Oil Profit Sharing and the Regulation of Minister of Finance Number 91/2023 on Palm Oil Profit Sharing Management.

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Chairman of POPSI, Pahala Sibuea, stated that the 20% palm oil profit sharing for governance presents significant opportunities to enhance efficiency, sustainability, and better management within the industry. The primary goal is to ensure that palm oil contributes not only significantly to the economy but also to environmental protection and sustainability.

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“The key aspects in this context should include plantation governance, the implementation of sustainable practices, and the improvement of planters’ welfare. With flexible fund allocation, we can enhance the capacity of cultivation teams, provide training, and foster development to achieve best practices,” he said.

In association with RAD KSB, palm oil profit sharing should be the important instrument to accelerate agrarian reformation, distribute natural resources equally. The sustainability in palm oil sectors should be placed as the core of the reformation, maximally delivering mandate to planters, the local, and environment.

“By optimizing palm oil profit sharing to get palm oil governance better, it is hoped to create more sustainable and positive impacts in the long period. The discussion would be essential to formulate the concrete action plans to realize the vision of inclusive and sustainable economic development in palm oil sector,” he said. (T2)

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