Indonesian Palm Oil Industry Leap from the CPO King to the Downstream King

Indonesia has succeeded in becoming the world’s largest CPO producer since 2006. The next challenge is to change from the “king” of the world’s CPO to the “king” of the world’s downstream products, namely oleofood products, biolubricants, biosurfactants, bioplastics and biofuels.

Maintaining, let alone becoming complacent, as the “king” of the world’s CPO is very detrimental to Indonesia especially in the long run. Indonesia’s dependence on the global CPO market will make the Indonesian palm oil industry easily manipulated by the world CPO market because the palm oil downstream industry is located and controlled by other countries. In addition, the added value of the downstream industry is also not enjoyed by Indonesia.

Therefore, Indonesia needs to accelerate domestic downstream industry of palm oil. Downstreaming the national palm oil industry should be placed as part of Indonesia’s industrialization strategy. As part of the national industrialization strategy, downstream palm oil needs to be designed far ahead (visionary).

To transform the Indonesian palm oil industry from the “King” of the world’s CPO to the “King” of Downstream Products, requires domestic downstreaming through three channels. First, the Oleofood Downstream (oleofood complex), that is the deepening of CPO/PKO downstream industries to produce intermediate oleofood products to finished oleofood products.

Second, the Oleochemical Complex, that is the deepening of industries that process CPO/PKO into products between basic oleochemicals to finished products such as biosurfactant, biolubricants, and biomaterial products. Third, the Biofuel Downstream (biofuel complex), that is the deepening of downstream industries that process CPO/PKO into biofuel products to finished biofuel products such as biodiesel, bioavtur, and biolubricant.

To support the downstreaming, it also requires multidisciplinary research-innovation activities in the downstream sector and is expected to accelerate the downstreaming of the national palm oil industry so that various types of downstream products with higher added value are produced. At the level of research (invention) of palm oil and palm biomass can produce hundreds of products both oleofood complex, oleochemical complex and biofuel complex (MPOB, 2017). Through business innovation research, it is expected to be able to change the invention into new product innovations.

In addition, it is also important to have policy support from the government. Changes in palm oil downstream policy in the future, namely the Simplification and Efficiency of Licensing, Improvement and Provision of Infrastructure Quality and Decrease in Credit Interest Rates. The combination of these three policies will accelerate downstreaming and benefit both FFB/CPO producers, downstream players, consumers and the government.

So with research-innovation and policy support from the Government, the Indonesian palm oil industry will produce leaps of innovation that will bring Indonesia to the rank of the current “king” of CPO in the world, becoming the downstream industry “king” (oleofood, biolubricant, biosurfactant, bioplastic and biofuel ) the world ahead.

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