Wednesday, November 9, 2011

Palm Oil Industry Development Strategy

Palm oil industry development strategy in Indonesia need to be formulated carefully, considering that it is a country with the largest world supplier of CPO. Their production in 2009 reached 18.6 million tons. Business prospects this commodity in this country would be good if all aspects were well managed by the government and must be fully supported by the palm oil (PO) industry. There are seven obstacles to the development of Indonesia's PO industry. Of the seven barriers can be concluded into four main things that should be considered by all parties.
Infrastructure development strategy
One of them is the absence of an international port as a main distribution point for palm oil from Indonesia. Then the suggestion offered is to start building an international port in the strategic areas of PO business (clusters) such as in Kalimantan (Borneo), Riau, and We Island at the northern part of Sumatra. The ports can be placed in the Straits of Malacca to be related to the European market, while to seize the Asia market, it can be built in the Natuna Sea or Borneo.
Environment Strategy
The existence of a moratorium on natural and peat lands are directly delivered by the president as a result of an agreement on inter-country meeting in Oslo, was worrying because it is probably narrow the possible field for the plantation. But after further review, the moratorium is for the common good. Business actors also recognize the support of a moratorium, but the government is expected to be fair in all the sectors of interest, and wise.
Development strategy of palm oil downstream industry
There is a desire of the investor to hasten the formation of a specialized agency that houses the business. High commitment is needed from government embodied in the form of, among others, a clear blueprint on the development of PO industry, policies that helps the development of the industry from upstream to downstream, and development activities are coordinated and integrated among relevant agencies, as well as the creation of more conducive investment climate to create more interest in the PO industry. Promotion institution is required specifically to promote the Indonesian palm oil products to the export destination countries to improve market access for that products in the international market.
Regulatory Improvement Strategy
These include the taxation system. Ideally the government establishes a warm climate to make a breakthrough policy. The fact, the government set higher taxes for the PO business, so the investors preferred to directly build a cooking oil factory in export destination countries. It is suggested that this tax can be minimized and better optimized if the tax paid to be returned again on the path of palm oil business, among others, to build the infrastructure, and returned in the form of incentive for farmers, so it will push the productivity up.
In addition to the four things that should be observed above, there is one additional strategy which is said by the Indonesia minister of agriculture, Mr.Suswono, that the key to overcoming the problem of low productivity per hectare, is research. Research needs to be held and allocated sufficient funds to do research because it is proven in the country of Malaysia which have less land for plantation, but their palm fruit can be produced twice as much as Indonesia in one hectare. Malaysia which is one of world's PO producer, has the Malaysian Palm Oil Board, which is a fusion of the two institutions: research and licensing institutions.
In addition, the 7th Indonesian Palm Oil Conference held by GAPKI expected to provide deal solutions for various issues and development strategies for palm oil industry.

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