By: Nana Sukmawati )*
Palm downstreaming is one of the strategic sectors that plays a role in accelerating food and energy self-sufficiency in Indonesia. The government has set an economic growth target of 8 percent supported by strengthening the palm downstream sector. Industry players have also welcomed this step as an effort to increase global competitiveness and strengthen national food security.
The two main aspects that are key in the palm downstream industry are optimizing international cooperation, including BRICS, and increasing investment in the downstream sector. Indonesia, which has officially become the 10th member of BRICS, has a great opportunity to expand palm oil product exports without trade barriers within the group.
The Secretary General of the Indonesian Oleochemical Producers Association (APOLIN), Rapolo Hutabarat, said that Indonesia’s bilateral economic cooperation with various countries has not yet maximized the potential of palm oil products. Several available incentives are not yet fully known by the domestic business world, so further socialization is needed.
According to him, Indonesia’s membership in BRICS can be an attraction for investment in the palm oil downstream sector. With a BRICS population of 3.9 billion people or 48 percent of the world’s total population, Indonesia has a very large market for its derivative products. This must be utilized optimally so that the domestic palm oil industry can develop further.
Furthermore, Rapolo emphasized that the development of value-added products from palm oil such as phytonutrients, beta-carotene, tocopherol, and tocotrienol has not been maximized. In fact, in the last three years, the market share of these products has reached US$10 billion. This potential could even increase to US$15 billion per year, equivalent to 50 percent of Indonesia’s total palm oil exports of US$30 billion.
Increasing investment in the downstream sector must also be supported by government incentives and technology transfer that allows the domestic industry to produce high-value products. Downstreaming also needs to be expanded to the palm biomass sector which has not been optimally developed, even though it has great potential to increase soil fertility and support the agricultural industry as a whole.
On the same occasion, the Executive Director of the Indonesian Vegetable Oil Industry Association (GIMNI), Sahat Sinaga, said that regulatory certainty is important in the national palm oil industry. He highlighted Presidential Regulation 5/2025 concerning Forest Area Regulation which is feared to hamper the palm oil industry and related sectors that depend on land use.
According to Sahat, if there are companies whose operations are outside the Land Use Rights (HGU), the government should resolve administrative issues without creating legal uncertainty. Clarity of regulations is crucial so that the investment climate remains conducive and supports the growth of the domestic palm oil industry.
He also proposed that the Minyakita program be stopped because it is considered to cause price dualism in one type of product. Sahat suggested that subsidies for the less fortunate be carried out through a more focused scheme, such as a program from the Ministry of Social Affairs whose funds can be taken from the palm oil industry levy without burdening the APBN.
Meanwhile, Secretary General of the Indonesian Biofuel Producers Association (APROBI), Ernest Gunawan, emphasized that the biodiesel industry has supported the B35 program with distribution realization reaching 13.1 million KL in 2024. To achieve the B50 target, an increase in production capacity is needed from the current 19.6 million KL to around 24-25 million KL.
To support this expansion, additional investment of around 4-5 million KL of installed capacity is still needed. However, according to Ernest, this investment will only occur if there is a guarantee of legal certainty and comfort in doing business for investors. Currently, there are still several APROBI member companies that are being investigated by the Attorney General’s Office, so this condition needs to be clarified immediately.
Overall, palm oil downstreaming not only plays a role in improving the economy but also in achieving food and energy self-sufficiency. By utilizing the potential of high value-added products and expanding exports to BRICS countries, Indonesia can strengthen its position as a major player in the global palm oil industry.
In addition, it is important for the government to provide fiscal and technological incentives to accelerate the development of the palm oil downstream industry. With this step, Indonesia will not only increase export value but also create jobs and reduce imports of food and energy products.
Downstreaming has the potential to increase national food security by utilizing palm oil derivative products as raw materials for the food industry. Thus, dependence on imports can be reduced gradually.
In addition, the development of the biomass industry from palm oil can
