NUSA DUA, BALI – The government is encouraging the acceleration of the transformation of the Indonesian palm oil industry through strengthening downstreaming, increasing plantation productivity, and developing technology and innovation. This step is part of the strategy to increase the added value of palm oil commodities while strengthening their contribution to food, energy, and national economic resilience.

Minister of National Development Planning/Head of the National Development Planning Agency (Bappenas), Rachmat Pambudy, conveyed that palm oil has a strategic position in national development. Its role is not only as an export commodity, but also as one of the pillars of the energy transition, community economic activity, and job creation.

Rachmat conveyed this in his remarks at the opening of the 22nd Indonesian Palm Oil Conference (IPOC) 2026 in Nusa Dua, Bali, Thursday (12/11/2026).

According to Rachmat, Indonesia needs to continue strengthening the palm oil industry structure so that it does not only depend on raw material exports, but is able to produce more derivative products with higher added value. The development of the downstream industry, increased productivity, and the utilization of technological innovation are important parts of this transformation.

Palm Oil Downstreaming Strengthens Added Value and Industrial Competitiveness

Downstreaming is one of the government’s priorities in developing the national palm oil industry. Through further processing domestically, palm oil can be utilized as raw material for various industrial products with higher economic value.

Rachmat mentioned that downstream product development needs to cover various sectors, ranging from Sustainable Aviation Fuel (SAF), biofuel, and oleochemical products, to the development of a green manufacturing ecosystem.

The development of these products opens opportunities for the palm oil industry to expand markets and strengthen its involvement in global industrial supply chains.

Besides increasing added value, downstreaming also has the potential to encourage investment, expand processing industry activities, and create job opportunities domestically.

Rachmat emphasized that innovation is the main strategy for strengthening economic resilience and national sovereignty. Therefore, the development of the palm oil industry needs to be supported by policies that can encourage investment, research, and the sustainable utilization of technology.

Increasing Palm Oil Productivity Without Relying on Land Expansion

Besides downstreaming, increasing plantation productivity is an important agenda in the transformation of the Indonesian palm oil industry.

Increasing production needs to be directed through intensification and optimization of the use of existing land, not solely through the expansion of plantation areas.

This approach requires the application of appropriate cultivation technology, increased human resource capacity, and the utilization of innovation to support plantation activity efficiency.

Higher productivity will strengthen the industry’s ability to meet the needs of palm oil for the domestic and export markets. On the other hand, increased productivity is also an important factor in maintaining industrial competitiveness amid the dynamics of the global vegetable oil market.

For people’s plantations, the productivity improvement agenda has strategic meaning. Strengthening grower capacity, the use of superior seeds, improvement of cultivation practices, appropriate fertilizing, and crop replanting are part of efforts to sustainably increase plantation yields.

Thus, the palm oil industry transformation is not only oriented toward increasing processing capacity, but also needs to pay attention to productivity at the plantation level as the foundation of raw material supply.

Digital Technology and Palm Oil Supply Chain Traceability

Strengthening digital technology is also part of the palm oil industry transformation agenda conveyed by Bappenas.

The government encourages the development of digital verification systems and real-time supply chain tracking to increase industry transparency and strengthen international market confidence.

Traceability is increasingly important in global palm oil trade. Information regarding the origin of raw materials, plantation locations, and production processes is needed to support the fulfillment of various market requirements and sustainability standards.

The strengthening of digital systems is expected to help increase data accuracy, improve verification processes, and facilitate monitoring of supply chains from plantations to final products.

The implementation of this system also requires the readiness of all industry actors, including plantation companies, palm oil mills, business partners, and smallholder farmers. Therefore, the development of digital infrastructure needs to be followed by increased human resource capacity and technical assistance so that its benefits can be felt more broadly.

Sustainability and Farmer Welfare in Palm Oil Transformation

Rachmat emphasized that the palm oil industry transformation must go hand in hand with the principles of sustainable development. Economic growth and increased industrial competitiveness need to pay attention to environmental protection and the welfare of the communities involved in it.

Smallholder farmers and plantation workers are an important part of the national palm oil industry ecosystem. Therefore, increased productivity and the development of the downstream industry need to be followed by efforts to strengthen human resource capacity, improve welfare, and ensure a safe and decent working environment.

Rachmat also emphasized the importance of the involvement of all stakeholders, starting from the government, business actors, farmers, workers, consumers, to civil society.

The government has a role in providing clear and consistent regulations and maintaining public interests. Meanwhile, the private sector is expected to continue increasing productivity, apply responsible business practices, and strengthen investment in research and innovation.

Government and Business Synergy Determines the Future of the Palm Oil Industry

The palm oil industry transformation requires strong synergy between the government and all industry actors. Downstreaming policies, increased productivity, technology development, and the application of sustainability principles need to move in one direction of mutually supporting development.

For Indonesia as one of the largest palm oil producers in the world, strengthening the downstream industry and plantation productivity is an important step to maintain competitiveness while increasing the economic benefits of this commodity for the community.

This agenda also opens opportunities for the palm oil industry to strengthen its contribution in the provision of food, renewable energy, industrial raw materials, and national manufacturing development.

Bappenas’ message at IPOC 2026 confirms that the future of the Indonesian palm oil industry is not only determined by the magnitude of production and exports, but also by the ability to increase added value, productivity, innovation, and sustainability.

Through integrated transformation, the palm oil industry is expected to be increasingly able to become one of the drivers of national economic development while strengthening Indonesia’s position in the global vegetable oil industry. (*)