The Downstream oil palm industry is part of industrial development which is the key to improving the national economy and the welfare of the Indonesian nation.
"Like it or not, downstreaming must be done," said Former Minister of Industry Saleh Husin quoting Antara.
He said downstreaming requires large investments, efficient production and optimal export arrangements. This simulation conducted by the dissertation shows that if the decline in upstream product exports is 5 percent and downstream product exports increase by 15 percent, it is estimated that Indonesia's foreign exchange will increase by 7 billion US dollars per year.
So that Gross Domestic Products which are indicators of economic growth will also increase. Downstreaming into products is directly used by consumers such as cosmetics and soap most likely to use palm oil.
He explained that palm oil is a product that is difficult to replace by other vegetable oils. The characteristics of palm oil are the easiest to be used as derivative products.
The land area needed is the least so that the production cost of palm oil is the lowest compared to other vegetable oils.
He said downstreaming could improve productivity from self-help oil palm farmers. Self-help farmers control 42 percent of palm oil land in Indonesia. However, production is still very low, namely 2-3 tons per hectare per year.
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"So it is still very far compared to large plantations owned by palm oil companies that produce 5-7 tons per hectare per year," he said.
Saleh Husin said the need for palm oil to produce downstream products in the country made palm oil prices that meet the standards increase. Downstreaming forces farmers to produce standard palm oil with higher productivity.
Downstream strengthens Indonesia's position as the world's largest palm oil seller, by weakening the position of palm oil buyers who have been dominating international palm oil trading.
So, said Saleh Husin, downstreaming allows Indonesia to minimize exports to palm oil traders, by not reducing national production.
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