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Govt vows to help boost palm oil industry competitiveness
The government has vowed to ramp up efforts to enhance the competitive edge of the palm oil industry through a replanting program and the diversification of export destinations
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he government has vowed to ramp up efforts to enhance the competitive edge of the palm oil industry through a replanting program and the diversification of export destinations.
The replanting program is critical to jack up the productivity of oil palm plantations in the world’s largest palm oil-producing nation as local plantations produce a low output of 2 to 3 tons of palm oil per hectare.
The government is confident that through the program, smallholders can raise their productivity, generating up to 8 tons of the commodity per ha each year if they use high quality, certified seeds.
“We know that smallholders don’t have the funds to conduct replanting, even though the trees are already aged 25 years old,” Coordinating Economic Minister Darmin Nasution said on the sidelines of the 13th Indonesian Palm Oil Conference on Thursday.
As many as 2.4 million ha of oil palm plantations are in dire need of replanting, according to official statistics.
President Joko “Jokowi” Widodo recently initiated the government-backed replanting program in Musi Banyuasin regency, South Sumatra, a major palm oil-supplying region.
The pioneer project was initially slated to cover 4,447 ha of plantation area, but as of the program’s inauguration, only 2,836 ha were declared clean and clear.
“The problem was related to the land status […] but the process of acquisition is still ongoing and we expect the remaining 1,611 ha to be opened up soon,” Indonesian Oil Palm Estate Fund (BPDP) chairman Dono Boestami said on the sidelines of the conference.
Going forward, Darmin said, the president would kick off the second replanting program at the end of the month in Deli Serdang, North Sumatra. The government had yet to identify the affected areas.
During the conference, the Indonesian Palm Oil Producers Association (Gapki) proposed a few recommendations to the government on how to improve the competitive edge of the domestic palm oil industry.
The lobby group urged, among other things, that it develop trade agreements with buyer countries and discover new markets. At present, top export destinations of Indonesian palm oil are China, the European Union, India and Pakistan.
Palm oil and its derivatives are among the largest contributors to Indonesia’s export revenue.
Gapki also demanded that the government improve the domestic investment climate to ensure business certainty.
“In particular, [it needs] to continuously review various regulations that potentially hamper investment,” Gapki chairman Joko Supriyono said.
Furthermore, the group also demanded that the government strengthen Indonesian Sustainable Palm Oil (ISPO) certification to enable it to become more credible and internationally recognized.
In response to the association’s appeal, Darmin said that in the past years, the government intensively looked to diversify its palm oil export markets through visits to several countries.
“In the past one to two years, the President has actively visited a lot of countries that were not Indonesia’s traditional markets,” he said.
Regarding Gapki’s demand to enhance the investment climate, Darmin claimed that the government had already passed Presidential Decree No. 88/2017 on the settlement of forest land areas for businesspeople working in the plantation sector.
Palm oil production is expected to jump by 12.31 percent year-on-year (yoy) to 36.5 million tons this year.
Meanwhile, exports of CPO and its refined products are estimated to reach 30 million tons, approximately 20 percent higher than the year before.
