Agriculture Ministry plantations director general Kasdi Subagyono called on businesses to invest in the downstream segment of the palm oil industry rather than investing in crude palm oil as nearly three-fourths of the 514 investment pledge with a potential value of Rp 313 trillion go to the palm oil.

"The requirements are simple. As long as the capital is present alongside a custodian bank, we can be open to investment," he said on Sept. 19.

Palm oil has generated significant foreign exchange revenue for Indonesia, contributing 1.5 percent to 2.5 percent to gross domestic product (GDP).

Smallholder farms account for cultivating oil palm on more than 3 million hectares of agricultural land in the country.

Indonesia produces an average 41 million tons of crude palm oil (CPO) each year, of which 34 million tons are exported around the globe, according to the Agriculture Ministry.

However, Indonesian palm oil has been facing pressure from the European Commission since March, when it reached a decision to phase out the use of palm oil by 2030 over deforestation concerns raised by the high-risk indirect land use change (ILUC) vegetable oil. The decision has sparked a trade spat between the European Union (EU), one of the world’s top importers of palm oil, and leading palm oil producers Indonesia and Malaysia.

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