Indonesia’s Palm Oil Industry Pushes for International Cooperation and Downstream Expansion

Indonesia’s palm oil industry is being urged to optimize bilateral economic cooperation and expand downstream sectors to support the 8% economic growth target and achieve self-sufficiency in food and energy.

According to Rapolo Hutabarat, Secretary-General of the Indonesian Oleochemical Producers Association (Apolin), there are two key strategies to achieve these goals: strengthening international partnerships, including BRICS, and expanding high-value downstream palm oil products.

"Indonesia currently has bilateral economic cooperation with 9-10 countries, but palm oil products have not been fully utilized within these agreements. This is partly due to a lack of awareness about available incentives," Rapolo stated during a fast-breaking event with Aprobi, Gimni, and Apolin, alongside the Agricultural Journalists Forum (Forwatan) in Jakarta.

He highlighted that Indonesia's inclusion in BRICS on January 6, 2025—a group consisting of Brazil, Russia, India, China, and South Africa—presents a major opportunity for the palm oil sector. These countries do not impose trade barriers on Indonesian palm oil, making them potential key markets.

Beyond international partnerships, expanding the downstream sector is another crucial step toward sustained economic growth. However, Indonesia has yet to develop high-value palm oil derivatives, such as phytonutrients like beta-carotene, tocopherol, and tocotrienol.

"Over the past three years, the global market for these products has reached $10 billion. Yet, no Indonesian pharmaceutical companies have ventured into this sector," Rapolo explained.

The potential market for phytonutrients is estimated at $15 billion annually, accounting for 50% of Indonesia’s total palm oil exports, which currently stand at $30 billion. He emphasized that technology transfer and government incentives are necessary to attract investment in this area.

Meanwhile, Sahat Sinaga, Executive Director of the Indonesian Vegetable Oil Industry Association (Gimni), expressed support for President Prabowo's administration, which has officially designated palm oil as a national asset. However, he warned that regulatory uncertainty remains a significant challenge for the industry.

One major concern is Presidential Regulation 5/2025 on Forest Area Regulation, which could negatively impact the national palm oil sector and businesses reliant on land use.

From the biofuel sector, Ernest Gunawan, Secretary-General of the Indonesian Biofuel Producers Association (Aprobi), reported that biodiesel B35 distribution in 2024 had reached 13.1 million KL, or nearly 98% of the target.

However, to support the B50 program, Indonesia needs a total biodiesel capacity of 24-25 million KL, while current installed capacity stands at only 19.6 million KL, leaving a gap of 4-5 million KL.

"We expect an additional 1 million KL capacity this year. Future expansions will only be viable if we ensure a stable investment climate and legal certainty," Ernest concluded.

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