PALMOILMAGAZINE, SANGATTA — Amid global market uncertainty and commodity price fluctuations, East Kutai Regency (Kutim) is taking bold steps to break away from its dependency on exporting raw palm oil products like Crude Palm Oil (CPO) and Fresh Fruit Bunches (FFB). The local government is now prioritizing downstream development and diversification in the plantation sector as the backbone of a more sustainable economic model.
This commitment was demonstrated during a Memorandum of Understanding (MoU) signing ceremony held at Hotel Royal Victoria, Sangatta, earlier this week. East Kutai Regent Ardiansyah Sulaiman witnessed the signing between the Plantation Office, the Cooperative and MSME Office, 13 oil palm farmer cooperatives, and major palm oil companies.
Beyond ceremonial value, the event also marked a milestone for 614 independent smallholders who officially received their Cultivation Registration Letters (STDB), covering 1,434 hectares. This legal recognition enables farmers to participate in partnerships, receive training, and access financial support.
Also Read: 614 East Kutai Farmers Secure STDB Permits, Advancing Legal and Sustainable Palm Oil Farming
“We cannot rely on exporting raw commodities forever. It’s time for Kutim to develop downstream industries such as cooking oil, soap, cosmetics, biodiesel, and even pharmaceuticals,” Ardiansyah stated, as quoted by Palmoilmagazine.com from the East Kutai Government, Friday (18/7/2025). “These industries create jobs, generate added value, and increase local revenues.”
As a major palm oil producer in East Kalimantan, Kutim has the potential to evolve beyond its traditional role as a raw material supplier. However, most of the harvest has been sold without processing—a pattern that Ardiansyah believes must change.
To support this transition, the government has designated the Maloy International Industrial and Port Area (KIPI) as the center for palm oil downstream industry. With its strategic coastal location, infrastructure readiness, and favorable policies, the area is poised to attract significant investment.
“We’re simplifying regulations and licensing. Kutim is open to palm oil processing investments,” Ardiansyah emphasized.
In addition to downstreaming, Kutim is also focusing on diversifying its agricultural commodities. The government is encouraging the development of banana, rubber, cocoa, pepper, pineapple, and vanilla through capacity-building programs, cooperative strengthening, and intensive guidance.
“If palm oil prices fall, our farmers shouldn’t fall with them. That’s why we must build strong alternatives,” Ardiansyah explained. He noted that bananas, for instance, can be processed into chips or flour, while rubber development requires tapping skills and cooperative support. Other crops like cocoa and pepper also hold strong local and export market potential with the right assistance.
The event was also attended by the Head of Cooperatives and MSMEs Office Teguh Budi Santoso, Acting Head of Plantation Office Iip Sumirat, subdistrict heads, village chiefs, palm oil company executives, and cooperative representatives. The gathering reflected a strong collaborative spirit to shift the economy from a raw material base to one centered on value addition and sustainability.
“May today’s STDB issuance and MoU signing help strengthen the bargaining position of Kutim’s oil palm farmers amid global business challenges,” Ardiansyah concluded. (P2)
