JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono said that the palm oil industry players are pinning a high hope on the new government that will be established by President-elect Prabowo Subianto and Vice President-elect Gibran Rakabuming Raka after a formal announcement of the general elections commission (KPU) as the winner of the presidential election in March this year.
Eddy Martono said that the palm oil business players hope the new government will resolve all problems facing the palm oil industry players, especially on the overlapping regulations among the ministries and government institutions that are assigned to manage the industry. The overlapping regulations had very often resulted in polemics among all stakeholders in the palm oil sector.
“The overlapping policies and the polemics created unconducive condition for doing business in the palm oil industries,” Eddy told the press recently.
The Palm Oil Agribusiness Strategic Policy Institute (PASPI) Executive Director Tungkot Sipayung confirmed that there are 17 ministries and institutions which are authorized to manage the palm oil industries. Each of them has different job desks and applies different policies.
“There are 17 ministries and institutions in charge of the palm oil industries. They have their own views in managing the palm oil industry, creating an obstruction to others when it comes to the implementations of the policies. As a result business activities often ended up unfinished due to the complex process,” Tungkot said.
Tungkot cited the example of the trade ministry’s policy on cooking oil. This policy deals with the downstream palm oil sector, but its issuance and implementation are not synchronized with the upstream aspects.
Eddy cited another example which is concerned with the government policy on the obligation of palm oil industry players to develop oil palm plantations for smallholders through a scheme of cooperation with the local people around their companies’ plantations. Based on the agriculture minister regulation (Permentan) No.26/2007 on guidelines of oil palm plantation business, all companies owning the plantation business licenses (IUP) or plantation business licenses for cultivation (IUP-B) are required to develop plantations for the local people at least at the size of 20% of their total plantation areas.
“Regarding this, the business players have to deal with three different ministries, namely agriculture ministry, agrarian and spatial planning ministry/ national land agency (ATR/BPN), environment and forestry ministry (KLHK), which apply different terms and conditions. As business players we’re confused which one to follow,” Eddy told the participants of a palm oil public discussion in Jakarta recently.
Tungkot proposed that the management of the palm oil industries from the upstream to downstream sectors should be made under one special and integrated institution, which is on par with the ministry and directly under president. “A special and integrated board can be a solution to the overlapping condition,” he said.
Currently, the palm oil industry is under the authority of the economic coordinating ministry which oversees the 17 ministries and institutions. But because it has to deal with many commodities, often the palm oil is not a priority, although it plays a strategic and important role in Indonesian economy.
Such demand for the establishment of a special institution has been also voiced by a number of palm oil associations, which include the Indonesian Palm Oil Association (GAPKI), the Indonesian Palm Oil House (RSI), the association of Indonesian Vegetable Oils Industries (GIMNI), and the Palm Oil Agribusiness Strategic Policy Institute (PASPI).
GAPKI Chairman Eddy Martono said that considering the fact that the palm oil industry plays a very important role in Indonesian economy, doing business in the industry should be made easier. That way, Indonesia can maintain its position as the world’s largest producer and exporter of palm oil products and maintain its position as market leader with around 40 percent market share in the global market of vegetable oils.
“The palm oil industry has proven as a huge contributor of foreign exchange, and without the palm oil commodity Indonesia’s balance of trade will be negative,” Eddy said, adding that in 2022 the palm oil industry contributed around Rp600 trillion in foreign exchange, which is the biggest in the history of Indonesian palm oil industry.
He expressed the hope that the next government will improve the governance in the palm oil industry, so that it can maintain its position as the mainstay of Indonesian economy.
Musdhalifah Machmud, the Expert Staff in charge of connectivity, services and natural resources development at the economic coordinating ministry, said recently that there is a possibility of the special palm oil board to be established by the new government. “I think, if all stakeholders agree, the new government will certainly set up the special palm oil board,” she said.
During their political campaigns before the presidential election on 14 February 2024, the presidential election success team of presidential and vice presidential candidates, Prabowo Subianto-Gibran Rakabuming Raka, had several times stated that if elected they will solve all of the problems facing the palm oil industries and take breakthrough steps to advance the palm oil industry, which employs around 18 million people directly and indirectly.
He said that for such purpose they will support the proposal to establish a special palm oil board to solve the overlapping policies and spur further development of Indonesian palm oil industries from upstream to downstream. “The special palm oil board should have a fully integrated authority to manage the palm oil industries and create conducive condition to drive the strong growth of palm oil industries from upstream to downstream,” he said during a public discussion recently. Benget Besalicto ST