The Progress of Oleo-chemical Industries in Indonesia

The Progress of Oleo-chemical Industries in Indonesia

InfoSAWIT, JAKARTA – As the biggest crude palm oil (CPO) exporter and producer in the world, Indonesia still has its chance to develop derivative industries to get the additional value to develop nationally. The downstream development should be same with the regional development too.

It is beyond expectation that oleo-chemical industry is still dominated by the basic oleo-chemical one. Though the CPPO production increases more than 10% in every single year, but the capacity of the industry does not hardy develop in the last five years.

The basic oleo-chemical industrial development, since biodiesel develops as the alternative and renewable fuel, is almost no news. Since 2008, the biodiesel industrial development massively happens in this country. In three years, biodiesel industries have been bigger than oleo-chemical industries nationally.

As description, in 2011, the capacity of biodiesel industries nationally had been more than 3 million tons per year while oleo-chemical industries had about 1 million tons per year.

As a matter of fact, oleo-chemical industries have been starting since 1980s. For the first time, it was started by PT Cisadane Raya Chemicals that produced fatty acids up to soap to wash.

From what InfoSAWIT knew, since the end of 2013, CPO derivative industries were stagnant globally and so were in Indonesia. The stagnant industries had something to do with the fluctuation price of material. The expensive CPO influences the selling products made of oleo-chemical.

The un-stable CPO selling price was not only the reason for the stagnant CPO downstream industries. The main reason always refers to the global demands and in Indonesia. It is no doubt that the regulations in Indonesia once influenced the CPO selling price.

There are lots of CPO business strategies implemented by the stakeholders. In the end, it should refer to the core of the business itself – the market should not be from the available one, but also should make the market demand itself.

Since 2014, big palm oil group companies have run kinds of strategies to develop CPO downstream. For example, Wilmar Group by developing Dumai and Gresik Industrial Zones; and Sinar Mas Group by developing CPO downstream industries in the same regions.

In 2017, oleo-chemical industries would be empowered through the presence or operational of new fatty alcohol industry that Sinar Mas Group and CEPSA Group of Arabic Emirate Union develop. The joint venture company is called Sinar Mas CEPSA.

Locating in Dumai, Riau Province, the new fatty alcohols factory would produce fatty acid and fatty alcohol within the capacity reaching 160 thousand tons per year. The material to be used would be from CPO that has been certified.

The presence of the new fatty alcohols factory is part of the CPO strengthening industry that could empower the domestic absorption and would increase the additional value from the CPO downstream product nationally. If the CPO downstream industries get better, they would directly strengthen the existence CPO industries nationally. Hopefully.(Written by:Kris Hadisoebroto/Board of InfoSAWIT Editorial/Palm oil Downstream Industrial Observer)

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