RI SEES $2.7 BILLION INVESTMENT IN DOWNSTREAM PALM OIL INDUSTRY

Jakarta, 16 Dzulqa’dah 1435/11 September 2014 (MINA) – The government said Indonesia, the world’s largest palm oil producer, had seen palm oil producer of US$2.7 billion in the country’s downstream palm oil industry between 2012 and 2014.

The investment came apparently after policies were introduced in 2011, including progressive export tax and tax breaks, to spur growth in the industry that processes palm oil into various derivatives.

At least 14 investment projects had been injected into the palm oil processing sector between 2012 and early 2014, mostly located in North Sumatra, a palm oil production center, according to Industry Minister MS Hidayat, The Jakarta Post quoted by Mi’raj Islamic News Agency (MINA) as reporting.

“Some of the investments came from existing companies that expanded their facilities and others from firms that built totally new facilities,” he said at a press conference about the Food Security Summit to be held next year.

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The overall investment, for example, has boosted the annual production capacity of domestic cooking oil facilities by 73 percent from late 2011 to 45 million tons early this year, as well as the capacity of fatty acid and fatty alcohol facilities, respectively by 47 percent to 1.1 million tons and by 85 percent to 1.2 million tons, according to statistics from the Industry Ministry.

The investment has also helped bolster the biodiesel industry, pushing up capacity by 57 percent to 5.67 million tons during the same period.

In addition, as investment came in, the varieties of palm oil derivatives produced locally also soared from 54 types to 154 types within the same time span.

This figure may climb further to 169 types by 2015, including advanced products such as bio-olefins, eco-friendly raw material to make plastics and bio-jet fuel, according to the ministry’s projection.

Indonesia sees $2.7 billion in investment in 2012-2014 period
The investment came after tax incentives were introduced
Output capacity and product variety has risen

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Hidayat further said that some billions of investment would enter the Indonesian downstream industry this year, particularly to build refineries in Sumatra to make oleochemicals.

However, he declined to elaborate further.

The development of the downstream palm oil industry has become one of the top priorities for the government, which in the past few years has campaigned to create added-value locally and push up exports through higher prices in the global market.

The encouraging growth on the downstream side has reversed the export structure, which was earlier dominated by crude palm oil, with palm oil derivatives now making up 70 percent of total overseas shipments from Southeast Asia’s largest economy.

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Meanwhile, Trade Minister Muhammad Lutfi said that in its efforts to expand palm oil exports, the government would continue to maintain its primary destinations, such as the European Union, as well as reach out to new prospective markets.

Among the new promising markets are Bangladesh and Pakistan, where Indonesia’s palm oil shipments increased by double digits on a monthly basis, as well as Turkey, a hub for shipments to surrounding countries in the central part of Asia; the Arab peninsula, such as Iran, Iraq and Syria; and Macedonia, an entry point to access the Balkan states, such as Greece.(T/P009/P3)

Mi’raj Islamic News Agency (MINA)