Indonesia Spurs Palm Oil Downstream Industry to Escalate FX Revenues

Director General of the Ministry of Industry I Gusti Putu Suryawirawan gave a speech at the Opportunity FGD for Indonesian IDN for the Prohibition of the Use of Palm Oil-Based Biofuel in the European Union at the Ministry of Industry in Jakarta (21/08).

JAKARTA (TheInsiderStories) –  The Ministry of Industry continues to drive palm oil downstream (CPO) sector in order to escalate foreign exchange (FX) revenues to Indonesia, said one official on Tuesday (21/08).

“We are trying to drive palm oil and its derivatives to be processed and sold abroad,” said Director General of Resilience and Development of International Industrial Access for Industry Minister, I Gusti Putu Suryawirawan in Jakarta.

The ministry noted, on an annual basis, the upstream-downstream palm oil industry contributed US$20 billion in foreign exchange. In addition, this sector also absorbs 21 million people directly or indirectly.

Recently, Indonesia contributes 48 percent of world CPO production and controls 52 percent palm oil export market. Therefore, he said, Indonesia has the opportunity to become the center of the processing industry global palm oil for food, non-food and renewable fuels.

According to Suryawirawan, there are three downstream pathways in the domestic CPO industry that have the potential to continue developed. First, the downstream of oleofood, namely processing refinery industry to produce products between intermediate oleofood until the finished product.

“Various oleofood products that have been produced in Indonesia, including palm cooking oil, margarine, vitamin A, vitamin E, shortening, ice cream, creamer, cocoa butter or specialty-fat,” said Suryawirawan in a written statement received by TheInsiderStories.

Then, he continued, oleochemical complex to produce products between oleochemicals, basic oleochemicals up to in finished products such as bio-surfactant products, bio-lubricant and bio-materials.

Next, biofuel complexes to produce products between biofuels to biofuel finished products such as biodiesel, biogas, biopremium, bioavtur, and others.

“Regarding the downstream biofuel, the government is currently serious about implementing the program 20 percent biodiesel (B20) fully in Indonesia, and expanding the use of the product in all vehicles motorized,” he added.

Suryawirawan believes that the B20 program could increase the utilization of local raw materials and projected to reduce imports of crude oil by 4.5 million liters per year or less more equivalent to $5.5 billion.

Economist from Padjajaran University Ina Primiana explained, the government’s strategy to strengthen palm oil downstream processing sector is one solution in facing the ban on Indonesian palm imports from European Union and other countries.

“So, the downstream industry, that is responsible for processing palm oil in the country must be able to produce processed palm oil products in different forms to expand export markets,” she said.

Currently, the price of CPO raw is only worth $800 to $1,000 per ton. However, she explained, if palm oil is processed for the needs of cooking oil production, the price will increase to around $1,000 to $1,400 per ton.

Furthermore if increasing to becoma added value product like glycerin, acid
fat, fatty alcohol, methyl ester, the price could reach $1,400 to $2,000 per ton.

And the price could lift to the range of $2,000 to $3,000 a ton if the palm oil is processed for the needs of surfactants, metal soaps, natural lubricants, resins azelat, biopoliol and dimeric acid, said her. In the form of cosmetics, soaps, biodiesel detergents, medicines, lubricants, biodiesel, lubricants to paint, the price can penetrate to $3,000 to $4,000 per ton.