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NEWS & ARTICLE

Indonesia's Palm Oil Outlook

As the largest of CPO producer since 2006, Indonesia has been striving to be the biggest palm oil downstream products producer in the world, either it is food related products such as cooking oil, margarine, shortening, vanaspati, cocoa butter substitute, and many other food ingredients or non-food related products such as biodiesel, detergent, soap and oleochemical derivatives such as lubricant, surfactants, and etc.

With the year 2050 as the target, Indonesia has been accelerating and expanding the palm oil downstream industry (downstreamization) since 2011 which is focused on developing oleochemical and biodiesel sector. The aim of the oleochemical industry development is to produce high quality products and to have a market that grow well in domestic and international. Lubricant and surfactant are some of the intended products. On the other hand, biodiesel development aim is to produces biodiesel (FAME) as a substitute for diesel oil whose import value and consumption is rapidly increasing and generate greenhouse emission, main contributor to the global climate change.

Year 2050 is projected to be the year when Indonesia’s biodiesel production will be able to achieve 40% biodiesel blend for domestic need (B40). This new role as the replacement for diesel oil will generate increasing needof crude palm oil (CPO) as raw material. Meanwhile, the need for oleofood and oleochemical downstreamization is also increasing according to Indonesia economic and population growth. In other word, downstreamization and biodiesel development need to be supported by the increase in CPO production to prevent trade-off fuel-food that happens in many countries in the world.

The method which is used to grow CPO production today by expanding the palm oil plantation area is also need to be changed, shifted to a new quality way by maximizing the productivity of the existing plantation. With that thought in mind and with the hope of a better future, the need for technological engineering and new machines to support palm oil industry from upstream to downstream will increase to realize the 2050 Indonesia palm oil vision, turning Indonesia into the biggest CPO and downstream products producer in the world that competitive and sustainable.

Policy Development of Palm Oil Industry in Indonesia

1. Based on Presidential Regulation No. 28 of 2008 about of National Industrial Policy, palm oil processing industry (CPO derivatives ) is one of the priorities to be developed and have higher added value, such as industry of oleofood, oleochemical, energy, and pharmaceutical.

2. In Regulation of Industrial Ministry No. 111/MIND/PER/10/2009 about the Guide Map (Road Map) Development of Palm Oil Industry Cluster, said that development of palm oil downstream industry cluster medium-term (2010-2014) will focus on North Sumatra, Riau and long-term will be integrated in East Kalimantan, West Kalimantan,South Kalimantan and Papua.

3. B15 mandatory is contained in Energy and Mineral Resource (ESDM) Minister Regulation No.12/2015 published in March 18, 2015 about Biodiesel Provision, Utilization, and Commerce as Substitute. The implementation of the mandatory biodiesel at 15% by mixing biofuel (fatty acid methy ester / FAME) would not only involve the downstream activities in providing supply but also the upstream