Palm Oil Governance Needs To Be Followed By Legal Certainty And Investment Guarantee

JAKARTA - The policy of the President of the Republic of Indonesia, Prabowo Subianto, to fix oil palm governance, is considered necessary to be followed by legal certainty and regulatory consistency, this is very important in an effort to increase downstreaming and economic growth by eight percent.

Therefore, Professor of IPB University Prof. DR Budi Mulyanto said Prabowo's idea of self-sufficiency in energy and expansion of the oil palm plantation area needs to be supported by all parties, because palm oil is an economic engine and also a good carbon absorber.

If you want to build food, energy, Indonesia must take care of palm oil. It is very possible to expand palm oil. This has nothing to do with deforestation," Budi said in Jakarta, quoted by Antara, Wednesday, February 12.

Another reason, he added, is that there are still many marginal lands that do not support biodiversity and have not been well worked on to provide added value to the economy, which currently covers 31.8 million hectares.

The expansion of palm oil, he continued, is still possible because there are many marginal land that have not been used optimally and are very potential, very likely from a strategic and regulatory perspective.

Budi, who is also the Head of the IPB Palm Oil Study Center, also highlighted that Indonesia's forest area is still very wide with a percentage of 51.7 percent, but agricultural land is only 31 percent. For food, it is even smaller, which is only 0.088 percent.

"This is not comparable to the relatively high population of Indonesia," he said in a discussion on Indonesian Palm Oil Magazine "100 Days of Prabowo-Gibran Government: Where Will the Palm Oil Industry Be Taken?" .

Meanwhile, land legal expert Dr. Sadino said efforts to increase the area of oil palm land were difficult because it was hampered by Presidential Instruction Number 5 of 2019.

"If you want to be rushed to increase the area of palm oil, Presidential Instruction 5/2019 must be reviewed or revoked. If it is not reviewed, there will be no addition. This is a note," he said.

In addition, there is also PP No. 36 of 2024, regarding the calculation of Non-Tax State Revenue (PNBP) for land, which causes no decent investment in land in Indonesia.

In PP, he added, land is no longer an incentive, but must be paid at the beginning, Rp. 75 million per ha if using land categorized as forest area. Then there is a cost of releasing forest areas having to pay Rp. 19 million per ha. And if it is late to fulfill the release of the forest area, the fine is Rp. 82 million per ha.

Sadino revealed that the PNBP also applies to National Strategic Projects (PSN). He also assessed that the PP has the potential to harm investors

Meanwhile, INDEF Researcher Tauhid Ahmad said that palm oil according to the records of the Central Statistics Agency (BPS) is a commodity that provides the highest propagation effect compared to other commodities.

He detailed, in palm oil investment, the average business surplus reached 66 percent both upstream and downstream.

According to him, Prabowo's homework at the beginning of his government was faced with declining conditions for palm oil and export production, so efforts were needed to boost the production side considering the trend of biodiesel needs was increasing.

"In the future, the palm oil industry will become the focus of downstreaming even though additional land expansion is needed," he said.

Similarly, Industry Observer Hilir Sawit Sahat Sinaga emphasized that Indonesia needs to increase the added value of palm oil from the current price of only 800-900 US dollars to 3,000 US dollars.

"The key is that the upstream is repaired first. Increased palm oil production from 52.4 million tons to 70.5 million tons in 2029. Then complete the completion of farmers' gardens entering the forest as quickly as possible, and issue certification of farmers' lands," he said.

The Chief Executive of the Discussion Qayuum Amri said that President Prabowo's statement which emphasized that palm oil as a strategic asset for the country greatly relieves palm oil industry players.

However, he continued, the palm oil industry needed legal certainty and security guarantees in the garden.