JAKARTA – A number of associations of downstream palm oil industries have revealed the parameters that determine the success of downstreaming program in Indonesia’s palm oil industries. Currently, the country’s export of crude palm oil (CPO) is far lower than those of processed palm oil products.
The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono revealed Indonesia’s export data of CPO and downstream palm oil products in 2024. Eddy said that based on data from the Statistics Indonesia (BPS) and the oil palm plantation fund management board (BPDPKS) this year (2024), export of CPO reached 2,17 million tons in February, or a drop of 26.48 percent compared to that in January at 2.81 million tons. The export of processed PKO rose from 106 thousand tons in January to 129 thousand tons in February 2024.
According to him, if Indonesia wants to increase the exports of processed palm oil up to 100 percent, then the government needs to clarify and open new markets for such exports.
“Raising our export of processed CPO up to 100% depends on the market. If there is a market, there will be certainly new investments to produce the processed palm oil in downstream industries,” Eddy told Kontan recently.
He said that investors will be more interested to invest in the downstream industries if the markets for the downstream products have been well mapped. If that is the case then the government’s downstreaming endeavor will be progressing well in generating economic growth, including in providing new jobs for workers.
“It’s just simple, if there is sugar then there ants will come. If the market is there, new investors will come or existing investors will expand their downstream businesses. It will push up economic growth and certainly absorb local workers,” he said.
Meanwhile, the Indonesian Vegetable Oil Association (GIMNI) Executive Director Sahat Sinaga said that the success of downstreaming also depends on what products will benefit exporters.
According to him, there are a number of CPO-based industries operated by Indonesian businessmen abroad. They will import CPO if its price is cheap. “If the exporters see it more profitable by selling palm oil derivatives with small amount of export tax and levy, they will prefer to export processed products rather than the CPO. What happens now is the mechanism of product choices that are more profitable for exporters,” Sahat told Kontan.
According to him, the volume of downstream products is around 8.6 times higher than the volume of crude palm oil, and their prices are averagely 1.5 times higher than that of CPO. “So, the government’s downstreaming program in palm oil industries has been implemented successfully,” he said. (*)
Source: KONTAN.CO.ID
