PALMOILMAGAZINE, JAKARTA – The palm oil industry has made tremendous contributions to the nation, especially since a decade ago with the development of the downstream palm oil industry in three product groups, namely, food, renewable energy (bioenergy) and maintenance products.
Industrialization or palm oil downstream has been running smoothly since 2012, initiated and managed by large palm oil entrepreneurs. Until now, it has produced hundreds of derivative products with various benefits for food, energy and care products and cosmetics.
Starting in 2016, Indonesia has become the largest producer and export king of palm oil in the world, beating Malaysia. By 2023, our total palm oil production will be 55 million tons and supply 54% of the global palm oil market.
Even today, palm oil has become the second largest non-oil and gas export after coal, with a value of US$30.3 billion last year, or 12% of total exports. In addition, Indonesia is also the world’s largest palm oil user with 27% of total global consumption.
Behind the increase in palm oil production and consumption, there are concerns about the competing uses of palm oil for food and bioenergy. Palm oil consumption for biodiesel in Indonesia last year reached 23.2 million tons, or 46% of total national consumption, with 44% for food and 10% for oleochemicals.
The commodity makes a significant contribution to poverty alleviation in rural areas as 40% of the approximately 16.5 million hectares of oil palm plantations across Indonesia are owned by 6.7 million smallholders and the palm oil industry directly and indirectly employs 16 million people.
With this extraordinary role and concrete contribution, palm oil should be treated as a strategic superior industry that deserves to be protected and well managed in order to provide sustainable social, economic benefits.
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However, unfortunately the government until the Jokowi administration has not yet designated palm oil as a strategic industry, instead it is often neglected and considered a thorn in the side of the green image or green commitment, and at critical times sacrificed with momentary interests.
The failure to resolve overlapping licenses and accusations of deforestation levied against the palm oil industry have failed to be responded to by a government that is stuttering in managing spatial planning and handling conflicts.
Considering the strategic value and the many problems and potential problems faced by the palm oil industry in the future, palm oil business players and parties hope that the new government under President Prabowo Subianto can implement several breakthroughs to improve governance in terms of policies, institutions and control of the palm oil industry.
The most important priority is for the new government to establish the palm oil industry as a national strategic flagship industry that needs to be protected, fostered and well controlled.
Legally, the palm oil industry, which provides livelihoods to millions of families, brings in foreign exchange and is a source of state revenue, deserves to meet the criteria as a National Vital Object in accordance with Presidential Decree No. 63/2004 on Safeguarding National Vital Objects where “National Vital Objects are areas/locations, buildings/installations and/or businesses that concern the livelihoods of many people, state interests and/or strategic sources of state revenue.”
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In the context of achieving President Prabowo’s mission to achieve food and energy sovereignty, as a strategic leading sector, the palm oil industry can be categorized into three characteristics of special strategic functions.
First, palm oil as a strategic food barn industry to achieve food security by establishing palm oil plantations and industries for integrated food needs and products as strategic vital objects for achieving national food security.
The palm oil industry for food security is prioritized on oil palm plantations that are already operational and integrated with the food product industry, ranging from cooking oil, margarine and others.
Second, the establishment of oil palm as a strategic bioenergy resource (energy sufficiency) with the designation of oil palm plantations and the palm oil processing industry into bioenergy, ranging from biodiesel, bioavtur and others. Considering the growth of palm oil consumption for energy is increasing, it is necessary to develop new oil palm plantations in locations suitable for bioenergy, such as Papua, Kalimantan and Sulawesi where there are still millions of hectares of degraded land and suitable for the development of plantations and the palm oil industry in a sustainable manner.
Third, the establishment of integrated palm oil plantations with value-added product industries, which can continue to be developed in accordance with market needs and technological developments.
The establishment of the palm oil industry as a strategic vital object must be based on a long-term development framework and roadmap, which requires better governance, expansion of research and development to produce superior seeds, integrated downstream and upstream processing policies, and alignment with environmental, social and governance sustainability standards.
As a strategic industry, it is time for palm oil to be managed in an integrated manner by a special strategic palm oil management institution that is responsible for policy formulation, coordination, integrated data and map management, licensing and control of the palm oil industry.
Important tasks of this institution are conflict resolution of land disputes due to overlapping licenses, development of oil palm plantations and downstream industries, research and allocation policies for the use of palm oil for various purposes, especially bioenergy and food for domestic consumption and export.
The important task of this institution is to resolve conflicts over land disputes due to overlapping licenses, development of oil palm plantations and downstream industries, research and policies on the allocation of the use of palm oil for various purposes, especially bioenergy and food for domestic consumption and export. (*)
By: Edi Suhardi
Sustainability Analyst,
Chair of Positive Campaigns Indonesian Palm Oil Association (IPOA/GAPKI)