Is Downstreaming Program Of Palm Oil Industry Successful?

Jakarta – The industry ministry’s Agroindustry Director General Putu Juli Ardika said that the government’s downstreaming program of palm oil industry has been quite successful in Indonesia. Currently, Indonesia’s palm oil exports are mostly downstream products.

During a hearing with the house of representatives’ (DPR) Commission VII on Tuesday, 13 September 2022, Putu said that due to the downstreaming program the palm oil products of Indonesia has been widely diversified from just the product of crude palm oil (CPO) from the upstream sector. “Through the downstreaming program we’ve managed to increase palm oil products from 54 kinds of palm oil products in 2011 to 168 kinds of products in 2021,” he told the hearing, which was also attended by cooking oil producers in Jakarta.

He said that in 2010 Indonesia’s palm oil export consisted of 60 percent CPO. “But in 2021, our export of CPO sharply decreased to just 9.27 percent, while the rest or more than 90 percent are downstream products,” he said.

In terms of value-added, Putu said, the downstreaming program has also created greater value-added to the national economy. “Biodiesel FAME is around 1.14 times higher than the CPO. The margarine and fat around 1.86 times, cooking oil 1.31 times, surfactant 2.66 times and cosmetics 3.88 times,” said Putu.

He said that looking forward the industry ministry will focus on reaching the target of downstream industry development program in 2045 to produce food fitonutrient,  fine chemical,  fuel liquid, and fiber-biomass.

He pointed out that currently the palm oil industry, from upstream to downstream sectors, has played a very important role in Indonesian economy as indicated by the fact that around 20 million people are dependent on the industry which has a total economic value of Rp750 trillion and export value in 2021 amounted to USD35.79 billion.

Indonesian palm oil industry also contributes 3.5 percent to national GDP and tax income of Rp20 trillion. Besides, the industry also pays around Rp86.64 trillion in export tax and export levy, which are collected and managed by the oil palm plantation fund management board (BPDPKS) for further development of the industry. (*)