PALMOILMAGAZINE, JAKARTA – Saleh Husin, the former Minister of Industry, emphasized the importance of palm oil downstream industries as a crucial component of Indonesia’s palm oil industrial development, which plays a pivotal role in advancing the country’s economy and enhancing the welfare of its people.
During his doctoral defense at the Makara Art Center, University of Indonesia (UI) in Depok, West Java, last Saturday, Saleh Husin, who has now earned his doctoral degree from the UI School of Strategic and Global Studies, underscored the necessity of having downstream industries.
“It would spend many investments, need efficient production, and optimally manage the exports,” he said, as Palmoilmagazine.com quoted from Antara, Monday (26/2/2024).
Also Read: Palm Oil Downstream Program Boosts Smallholders Production and Drives Economic Growth
In his dissertation, simulation done showed that by having decreasing upstream sectors up to three percent, and having increasing downstream exports up to five percent, the revenue of Indonesia could be increasing US$ 7 billion per year, and gross domestic products would escalate as the indicator of increasing economy.
Downstream industries would make palm oil as direct material for consumers’ goods, such as, cosmetics and soap that other vegetable oils could not substitute. Saleh also emphasized the unique characteristic of palm oil makes it easier to be applied for other derivative products.
Besides, the plantations needed to develop palm oil are relatively narrow and the production costs could be cheaper than other vegetable oils.
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Having downstream industries could escalate independent smallholders’ plantation productivity which is now much less than the big companies’ productivity or about 2 – 3 tons per hectare per year.
“Palm oil needs for industries made standard palm oil price get escalated. It forces the smallholders to escalate their plantation productivity,” Husin said.
Having downstream industries would reinforce Indonesia, not only as the biggest palm oil producer in the world but also would weaken palm oil buyers that dominated the international level – trade for all these years.
It means, having downstream industries should be the strategy to enable Indonesia reduce export dependence to other palm oil buyers without reducing the production in national scale. (T2)
