By: Elisabeth Titania Dionne)*
The palm oil industry has long been a major pillar of the Indonesian economy. This commodity contributes significantly to the country’s foreign exchange and is a livelihood for millions of farmers across the archipelago.
Under the leadership of President Prabowo Subianto, the government has taken strategic steps by encouraging palm oil downstreaming as an effort to realize more equitable and sustainable economic distribution.
The downstreaming steps that have been initiated aim to maximize the added value of palm oil products. President Prabowo emphasized the importance of diversifying palm oil products, such as biodiesel, to support national energy security.
The B50 biodiesel program, designed to absorb 24 million tons of domestic palm oil, is one of the flagship initiatives. This policy not only strengthens domestic consumption but also stabilizes palm oil prices, providing direct benefits to small farmers who have often been affected by global market price fluctuations.
In addition, the establishment of the Daya Anagata Nusantara Investment Management Agency (Danantara) is expected to optimize the management of state assets, including state-owned companies that focus on the palm oil sector.
With the leadership of Muliaman Hadad as Head and Dr. Kaharudin Djenod as Deputy Head at BP Investasi Danantara, Danantara is directed to become a strategic investment driver, similar to the Temasek model in Singapore. This step reflects the government’s commitment to improving the global competitiveness of the Indonesian palm oil industry.
One of the challenges faced in palm oil management is non-transparent business practices. Several unscrupulous entrepreneurs who do not have NPWP and official accounts are considered detrimental to the industry as a whole.
Firm action by the government against such business actors is expected to increase market confidence while creating justice for all parties involved. The policy of reducing export quotas is one of the real steps taken to ensure that the results of the palm oil industry can be enjoyed by the Indonesian people.
In his inaugural speech, President Prabowo highlighted the great potential of palm oil as a solution to reduce Indonesia’s dependence on imported fuel oil (BBM). He proposed increasing palm oil plantations to ensure sufficient supply of biodiesel raw materials without having to worry about deforestation issues.
According to the Head of State, oil palm is a plant that can absorb carbon dioxide so that it still supports environmental sustainability if managed properly. Support for this proposal also came from various groups, including academics.
Professor of the Faculty of Forestry, IPB University, Prof. Yanto Santoso, assessed that the expansion of oil palm plantations carried out in degraded forest areas is not included in the category of deforestation.
He explained that the management of damaged forests for oil palm planting, while still paying attention to the composition of 70 percent oil palm and 30 percent forest plants, can actually be called reforestation. This step not only increases land productivity, but also helps prevent forest fires that often originate from unmanaged areas.
Furthermore, Prof. Yanto highlighted the importance of transparency in the implementation of this program. The government is encouraged to provide detailed explanations regarding the location of additional oil palm plantations and their management methods.
This approach is needed to reduce negative accusations related to environmental issues while demonstrating commitment to sustainable development. According to him, palm oil is a gift from God that has extraordinary economic benefits and must be utilized optimally.
On the other hand, the Indonesian Palm Oil Entrepreneurs Association (Gapki) also expressed its support for the palm oil downstream policy. Gapki Chairman Eddy Martono emphasized the need for regulatory simplification to improve the efficiency of industrial governance from upstream to downstream.
Currently, there are 37 ministries and institutions involved in palm oil management, so there is often overlapping policy. Gapki proposes the establishment of the National Palm Oil Agency as a solution to unify data and policies under one integrated umbrella.
This proposal is considered relevant considering Malaysia’s success in managing their palm oil industry through the Malaysian Palm Oil Board (MPOB). With the National Palm Oil Board, Indonesia can increase its productivity and competitiveness in the global market. Eddy Martono also emphasized that simpler regulations will have a positive impact on small farmers who have been the backbone of the national palm oil industry.
The palm oil downstream policy pushed by President Prabowo reflects a grand vision to create a just economic transformation. Despite facing various challenges, such as environmental and governance issues, this step opens up a great opportunity for Indonesia to become a global leader in the palm oil industry.
By combining a strategic approach, environmental sustainability, and economic justice, the palm oil industry is not only a source of foreign exchange, but also a major instrument in realizing economic equality throughout the country.
This step is also in line with the long-term goals of national economic development. By optimizing the potential of palm oil, Indonesia can accelerate the realization of sustainable development goals (SDGs), especially in terms of poverty reduction, clean energy provision, and better environmental management. The government views palm oil downstreaming as a key strategy to change the economic structure based on raw material exports into producing high-value finished products.
The palm oil industry also has a great opportunity to support the energy transition in Indonesia. By utilizing palm oil as a raw material for biodiesel, the country can reduce its dependence on fossil fuels while strengthening its position as one of the world’s leading renewable energy producers. Research and development in this sector is expected to produce innovations that will further strengthen the competitiveness of Indonesian palm oil in the global market.
At the domestic level, the palm oil downstream policy has a significant impact on improving the welfare of small farmers. With more stable prices and wider market opportunities, palm oil farmers can enjoy the fruits of their hard work more fairly.
In addition, the government is also expected to accelerate the development of supporting infrastructure in palm oil production centers. This includes roads, ports, and modern palm oil processing facilities.
With an integrated approach, the palm oil industry is not only a driving force for the economy, but also an example of how Indonesia can manage natural resources responsibly.
)* The author is a contributor to Gelora Media Institute