Palm Oil Industry: Need Cooperation between the Government and the Stakeholders (Planters)

Palm Oil Industry: Need Cooperation between the Government and the Stakeholders (Planters)

InfoSAWIT, JAKARTA – Since the early of 90s, the government has dreamed to have industrial cluster, including in palm oil. Unfortunately the industrial cluster slowly develops. So it needs the good cooperation between the government and the stakeholders.

The enthusiastic to develop palm oil industries and the derivatives gets more namely in the downstream sector for the crude palm oil (CPO) demands increase in every single year. In the first decade of 2000, the plantation development (the downstream) progressively increased, more than 10% in every year.

Meanwhile in the downstream industries, though there was few progress, but it was too slow reaching 5 – 10 % only of the total CPO production in Indonesia in every single year. Until now, the downstream industries could not be taken as the ideal or liner progress with the downstream sector, within the CPO dominating the exports in this country.

In Sumatera, namely in Riau, it is the highest CPO producer in Indonesia, more than 5 million tons out of the province in every single year. What the better is, the dream of the government to have the industrial cluster is in the province. The upstream industries both to produce edible (refinery of oil and food fat), non-edible (oleo-chemical) and vegetable fuel (biodiesel) develop well in Riau, namely in Dumai, along the  Rupat strait, precisely in Malaka Peninsula, Malaysia.

Why do the industrial clusters develop in Riau? Besides the decision – Rupat Strait as the industrial cluster, it happens for the region is wide, has depth to shipping, and good for tons of ships to anchor, and there are lots of energy of electricity, such as, coal, and abundant natural gas around Dumai. But it has to be admitted, there are lots of minimal infrastructure there.

It seems that the government does not support the industrial cluster development along Rupat Strait. The investors only have good thoughts to develop the downstream industries there.

The ideal is that the privates develop the industries while the government prepares the energy and infrastructure, including the good port so that there will be no issue to trade the products. Unfortunately the government is not able to fulfill the utility and provide the infrastructures, including, the land, sea transportation, and the good logistic.

The industrial clusters develop ‘wildly’ along Rupat Strait for each factory develops its own port, storage and transportation infrastructure. As the result, the infrastructure investment is un-separated part of the investment and in the end, the downstream product of the ‘downstream’ cluster in palm oil industries in Duma is less competitive for it should burden the investment fee of the infrastructure and utility that is not cheap to spend.

When will the good utility and infrastructure be fulfilled by the government in Riau? There is no certainty. If the industries develop in efficient cost, automatically, the regional government would get the profit from the economic progress there.(Written by: Kris Hadisoebroto, Observer and National Palm Oil Downstream Industrial Practitioner, One founder of APOLIN)  

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