Government Continues to Encourage MSMEs Through Diversification of Palm Oil Derivative Products
Jakarta – The government continues to strengthen its industrial downstreaming strategy as a key step in realizing inclusive and sustainable national economic growth. One of its main focuses is palm oil, which is considered to have significant potential to encourage diversification of derivative products and strengthen the role of domestic Micro, Small, and Medium Enterprises (MSMEs).
Dida Gardera, Expert Staff to the Coordinating Ministry for Economic Affairs, emphasized that the government is targeting national economic growth of 8 percent by 2029. To achieve this ambition, a strategy to accelerate industrial downstreaming is key, especially in strategic commodity sectors such as palm oil.
“Palm oil is one of the government’s main focuses in encouraging the acceleration of downstreaming of derivative products,” said Dida. According to him, diversification of downstream palm oil products not only impacts added value and financial returns, but also touches on other strategic aspects such as energy security, foreign exchange savings, and contributions to global environmental issues.
One concrete example of this effort is the implementation of the palm oil-based biodiesel program, which has now entered the B40 phase, a 40 percent biodiesel blend with diesel fuel. This program is projected to absorb up to 15.6 million kiloliters of CPO. “This means our energy needs can be met more domestically and we will be less dependent on diesel imports,” explained Dida.
In addition to strengthening the industry at the national level, support for palm oil MSMEs is also a serious concern for the government. Helmi Muhansah, Head of the Community Cooperation and MSME Division of the Plantation Fund Management Agency (BPDP), explained that his agency continues to strengthen the oil palm plantation ecosystem through various programs such as replanting smallholder oil palm plantations, providing plantation infrastructure, human resource (HR) scholarships for oil palm farmers, training for farmers, and support for strengthening palm oil MSMEs.
“In addition to continuing to strengthen the upstream sector, oil palm farmers can also diversify their income beyond Fresh Fruit Bunches (FFB),” he said. This diversification, Helmi said, allows oil palm farmers to utilize palm oil derivative products such as packaged cooking oil, soap, candles, and even natural cosmetics, which can be developed as small and medium-sized businesses.
He believes this step not only improves farmers’ welfare but also makes a real contribution to the national economic growth target. “This supports 8 percent economic growth by increasing domestic consumption of goods produced by palm oil MSMEs,” Helmi added.
Furthermore, industry players also fully support the government’s efforts to promote inclusive palm oil downstreaming. The Chairman of the Indonesian Palm Oil Producers Association (GAPKI), Eddy Martono, believes that the involvement of MSMEs in the downstream palm oil ecosystem is a crucial step to ensure equitable distribution of industry benefits.
“GAPKI supports MSMEs that use palm oil derivative products. Inclusive downstreaming will ensure that the benefits of the palm oil industry are felt at the lowest levels of the economy. This way, MSMEs can become more resilient, create more jobs, and achieve sustainable economic growth,” said Eddy.
Eddy also added that palm oil downstreaming opens up significant innovation opportunities for MSMEs. The more palm-based products developed, the greater the variety and selling value that can be offered. “With more palm-based products, product variety increases, sales increase, and MSMEs can survive and even thrive,” he said.
These efforts by the government, plantation fund management institutions, and industry players demonstrate strong synergy in optimizing the potential of palm oil not only as an export commodity but also as a driver of the people’s economy. By encouraging downstreaming and diversification of palm oil derivative products involving MSMEs, Indonesia has great potential to become a major player in the global supply chain while strengthening national economic independence.
