Indonesia, Malaysia Encourage Processed Palm Oil Industry Development

Jakarta, InfoPublik - Industry Minister Airlangga Hartanto said that the governments of Indonesia and Malaysia are committed to encourage the development of processed palm oil industry which is able to increase the product’s added value and eco-friendlyness, because Indonesia and Malaysia are the largest palm oil producers in the world.

"The Industry Ministry has committed to increase the added value of Indonesian palm oil products through downstream industry," he said in Jakarta on Monday (12/5).

In 2015, the total production capacity of crude palm oil (CPO) raw material and palm kernel oil (PKO) was 35.50 million tons. 8.09 million tons of the products were distributed for domestic consumption, 15.15 million tons for downstream product export, and 12.26 million tons of CPO were exported.

Meanwhile, the export value reached USD 24.77 million and there were 146 types of downstream products that were produced.

Industry Ministry’s Director General of Agro Industry Panggah Susanto explained that the industrial area in Berau, East Kalimantan is ready to become a green economic zone for the development of palm oil. It is also known as palm oil green economic zone (POGEZ).

According to him, the development of POGEZ was initiated by the governments of Indonesia and Malaysia through the establishment of the Council of Palm Oil Producing Countries (CPOPC).

"We also expect POGEZ to be established in East Kalimantan. Berau Industrial Zone is ready because it is supported by the availability of adequate facilities and infrastructure," said Panggah after accompanying Airlangga in a meeting with President Director of PT Berau Nusantara Kawasan Industri. 

Panggah explained that Berau Industrial Area was built on 3,400 hectares of land and has been facilitated with harbors, water supply, electricity, as well as the pulp and paper industry which is already operational.

"Hopefully, the downstream industrial products produced from the industrial area could meet the internationally certified sustainability standards and would result in creating advantages in the form of marketing area preference, premium selling price, and other facilities or conveniences," he said.

Regarding the development of POGEZ, said Panggah, Indonesia and Malaysia, have proposed three locations. The Indonesian side proposed the development of Dumai Industrial Area in Riau, Berau Industrial Area in East Kalimantan, and Sei Mangkei Industrial Area in North Sumatra. Meanwhile, the Malaysian side proposed the development in Lahad Datu, Bintulu and Tanjung Manis.

Panggah added that the two countries would also invite other palm oil producer countries to join the CPOPC. After joining, these countries are expected to bring out a positive impact for CPO commodity in the world.

"Some palm oil developer countries are going to join CPOPC, such as Brazil, Nigeria, Ivory Coast and Thailand, among others " he concluded. (Translator: Erik Limantara