Palm Oil Industry Contributes IDR 88.7 Trillion To The State Treasury

PKPN Intermediate Policy Analyst Fiscal Policy Agency (BKF), Nursidik Istiawan (two from the left) (Photo: Mery Handayani/VOI)

EAST BELITUNG - Downstreaming in the palm oil industry sector has succeeded in increasing added value in the national economy. The palm oil industry was recorded as contributing to state revenues of up to IDR 88.7 trillion throughout 2023.

PKPN Intermediate Policy Analyst Fiscal Policy Agency (BKF), Nursidik Istiawan said various derivative products from Crude Palm Oil (CPO) and Crude Palm Kernel Oil (CPKO) showed a significant increase in added value.

For example, continued Nursidik, cooking oil has an added value of 1.31 times the basic CPO, margarine of 1.86 times. Meanwhile, cosmetics reached 3.88 times.

Nursidik said that apart from these products, palm downstream also produces other products. Such as biodiesel (FAME) with an added value of 1.33 times, 1.73 times chocolate fat, 1.88 times fatty acid, 1.60 times alcoholic fatty, and surfactants with an added value of 2.66 times.

"So the role of palm oil is quite high for the next industry and we need to continue this, how can the added value be created in our economy. So that industry players including the palm oil industry can take advantage of it themselves," he said in the Press Tour. Palm Oil Contribution for the State Budget and the Economy, quoted Wednesday, August 28.

Based on data presented by Nursidik, Palm Oil production is used to meet domestic needs by 42 percent and exports by 58 percent.

The export value of palm oil and its derivatives recorded an increase from 16.8 billion US dollars in 2015 to 23.9 billion US dollars in 2023. Data shows that since 2011, exports of palm oil derivative products have increased significantly.

In 2023, only 10 percent of palm oil exports are in the form of raw CPO, while the other 90 percent are derivative products that have been processed and have higher added value.

"There is a shift from 2010 to 2023 where there is a shift from export or palm oil production which then shifts to back-derivative production," he said.

The palm oil industry deposits IDR 88.7 trillion into the state treasury

Based on data from the Ministry of Finance's BKF, the production value of the palm oil sector is estimated at IDR 729 trillion. The sector contributed IDR 88.7 trillion to state revenues throughout 2023. In detail, taxes contributed IDR 50.2 trillion, PNBP from export levies of IDR 32.4 trillion, and BK IDR 6.1 trillion.

Nursidik said that the deposits that entered the APBN could not be separated from the government's support for oil palm plantations in the form of tax incentives in 2023.

"This has an impact on state revenues that occur due to policies," said Nursidik.

In addition, the palm oil sector is also encouraged for energy security. The government has also implemented a mandatory biodiesel policy since 2015, starting from B15 and increasing to B35 in 2023.

The policy aims to maintain domestic CPO demand by increasing domestic absorption.

"We also see that it has something to do with renewable energy programs, which in this case is the B35 program," he said.