Palm Oil Has Irreplaceable Role In Indonesian Economy

JAKARTA – The palm oil industry is still the leading sector in generating the economic growth of Indonesia. Despite the lingering outbreak of Covid-19 pandemic that has impacted almost all of economic sectors, the palm oil industry is still growing positively and giving the largest contributor to the national gross domestic product (GDP).

Edy Yusuf, assistant deputy in charge of agribusiness and plantation development at the economic coordinating ministry, said in Jakarta recently that there are at least four benefits provided by the palm oil industry to Indonesian economy.

First, as a labor intensive industry from upstream to downstream the palm oil sector employs directly 4.2 million workers and indirectly 12 million people.

Second, every year the palm oil industry has contributed 3.5% to Indonesia’s GDP.

Third, its contribution to the national non-oil-gas exports reaches at the average of 13.5% per year. Its projected contribution through taxes to the national income will reach Rp2.47 trillion.

Fourth, it creates a self-sufficiency in energy through the mandatory program of biodiesel, which saves foreign exchange and help reduce carbon emissions that is good for environmental protection. The government’s biodiesel mandatory program can save foreign exchange and reduce import of diesel fuel at US$8.0 billion per year.

“Indonesia is known as the world’s largest producer of palm oil. It’s no wonder that it plays a very important role in the national economy of Indonesia. Such role is still irreplaceable until now,” Edy Yusuf said during an event of Journalist Fellowship in Jakarta recently.

Indonesia’s production of crude palm oil (CPO) in 2021 is predicted to reach 49.71 million tons. Its total CPO production has been consistent at around that level during the last five years. “Due to its very good quality, the palm oil has become an envy in the global market of vegetable oils. Certain people and groups have been trying to block the palm oil. Among them is the European Union (EU),” he said.

He said that the Indonesian government will keep pursuing smart efforts of countering the negative campaigns launched by the EU against the palm oil. “The government will also keep developing the national palm oil industry through a number of programs. The programs include the action plan of sustainable palm oil as stipulated in the presidential instruction No.6/2019 on improvement of data, coordination, and development of infrastructure to increase capacity of oil palm growers. The government has been also implementing the program of replanting the oil palm plantations owned by smallholders who control around 40 percent of Indonesia’s total oil palm acreage. Through the replanting program, the productivity and sustainability of smallholders will be increased.

The government has also issued the presidential regulation (Perpres) No.44/2020 that requires all palm oil industries to get certification of  Indonesian Sustainable Palm Oil (ISPO).

“ISPO certification requires all growers to implement seven basic principles of ISPO. The seven basic principles are business development based on sustainability principle, transparency, compliance to prevailing regulations, good plantation practices, social responsibility through economic empowerment and environmental protection.

“With ISPO, Indonesian palm oil industry will become stronger at the global market, as ISPO functions like weapon and shield in the market competition,” he asserted.

The Indonesian Palm Oil Association (Gapki) Foreign Affairs Division Head Fadhil Hasan concurred with Edy Yusuf, saying that the ISPO program is a powerful weapon against the negative campaigns in Europe. “The EU had been always asking for a sustainability certification for palm oil. Now, Indonesia has already had the ISPO. About 80% of Gapki member companies have owned ISPO certificates. We’re continually pushing for the implementation of sustainability principles among the oil palm growers,” he asserted. (*)

Source: Investor Daily | Featured image