Strategic Roles and Contributions of Palm Oil for Indonesia’s Economy

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Palm oil contributed both from the smallholders' and big private companies’ plantations to support the economy nationally. Photo by: Sawit Fest 2021 / Farid Yuwono

PALMOILMAGAZINE, JAKARTA – Palm oil plays a crucial role in global production and serves as a pillar of national economic development in Indonesia. Beyond its trade contributions, the sector provides employment for a significant number of workers. Currently, palm oil plantations in Indonesia cover approximately 16.38 million hectares, spanning from Aceh to Papua.

During the Coordination Meeting of the National Action Plan for Sustainable Palm Oil Plantations, Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia is the world’s largest palm oil producer, with total production exceeding 50 million tons and exports reaching around 26.33 million tons.

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In 2023, crude palm oil (CPO) and its derivative exports amounted to USD 28.45 billion, accounting for 11.6% of non-oil and gas exports, and provided employment for 16.2 million workers, including smallholders.

Also Read: Riau Province Boosts Palm Oil Smallholders Welfare Through Partnership 

This progress showed that palm oil really contributed, both from the smallholders and big private companies’ plantations, to support the economy nationally. Besides quantity, the increasing palm oil quality and productivity would be the future focus. That is why Palm Oil Plantation Fund Management Agency (PFMA) would play its roles to optimize palm oil plantation fund to realize the vision of Indonesia Emas 2045.

PFMA is one non-echelon organization in Ministry of Finance. It is in charge to Minister of Finance through General Director of Treasury. PFMA was established based on the chapter 93, Laws Number 30 / 2014 about Plantation. The goal is about to collect CPO supporting fund (CSF) from every planter to support and realize sustainable palm oil.

 

The Goals and Programs

The main goals in PFMA would be about to develop human resource, research and development, promotion, replanting program, and escalate palm oil plantation infrastructures. The fund would also be used for food and downstream industrial needs.

Smallholders replanting program (SRP) is about to help the smallholders to improve their plantations by planting new more environmental, sustainable trees within high quality, and minimizing the risks of new illegal plantations.

Human resource development: PFMA fully delivered scholarship for diploma one (1) to undergraduate students. It is hoped to get superior, innovative, competitive human resources and to escalate the smallholders’ welfare and palm oil industrial productivity.

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Research fund” to answer the challenges in palm oil plantations, PFMA delivered fund of research for institutions, universities, researchers in Indonesia. From 2015 to May 2023, PFMA gathered Rp 146,56 trillion from CSF and Rp 519,67 billion was funded 293 research in 37 research institutions and involved 900 researchers.

Knowing and understanding that CPO exports have high value and production, PFMA should play its important roles to escalate the people’s welfare and contribute to the exchange. To realize the vision of Indonesia Emas 2045, PFMA keeps encouraging to develop human resources and downstream indusris. This is about not to focus on raw material only but also get the ready used – end products. The program is hoped to escalate palm oil competition from Indonesia and significantly get additional values for the economy nationally.

With the right strategies, palm oil sector in Indonesia would contribute not only to develop the economy but also support the people’s welfare and sustainable development.

By: Aventus Purnama Dep/Graduated from Universitas Katolik Indonesia Santu Paulus Ruteng

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