Jun 30, 2024

Palm Oil: Indonesia's Path to Economic Vitality

Sumber : http://www.merdeka.com/
By : Atep Afia Hidayat

It is undeniable that crude oil forms the backbone of the economy for Arab countries. Can Indonesia follow in the footsteps of Middle Eastern nations, making oil and gas (Migas) the primary source of foreign exchange earnings? The answer is challenging, given its limited natural resources. There is a trend of declining value in oil and gas exports, partly due to aging well conditions. Nevertheless, fossil fuels are non-renewable resources. However, it is highly plausible to position palm oil plantations and industries as the main source of foreign exchange earnings.

According to data from the Ministry of Industry (2016), Indonesia's export value in 2015 reached USD 161.18 billion. This continues a decline from USD 190.02 billion in 2012, USD 182.55 billion in 2013, and USD 176.29 billion in 2014. In 2015, the contribution of oil and gas exports amounted to USD 24.25 billion or 15.05%, while non-oil and gas exports reached USD 136.92 billion or 84.95%. Oil and gas export components included crude oil (USD 8.32 billion), oil products (USD 2.36 billion), gas (USD 3.23 billion), and natural gas (USD 10.34 billion). Non-oil and gas export components encompassed agriculture (USD 5.63 billion), industry (USD 106.66 billion), mining (USD 19.41 billion), quarrying (USD 5.19 billion), and others (USD 32.3 million).

The industrial sector significantly dominates, contributing 66.17% to the overall export value and 77.90% to non-oil and gas exports. Further analysis reveals that within the 31 industrial product groups, the coconut/palm oil processing industry makes the largest contribution, amounting to USD 20.75 billion or approximately 19.45% of the industrial sector's export value. This is followed by the steel, machinery and automotive industries (USD 14.46 billion or 13.55%); Textiles (USD 12.26 billion or 11.50%); Electronics (USD 6.91 billion or 6.48%); and rubber processing (USD 6.17 billion or 5.79%).

Within the coconut/palm oil processing industry group, there are 14 sub-groups of industrial products, including palm cooking oil (USD 13.29 billion), palm oil (CPO/PKO) (USD 5.71 billion), olein (fatty acids) (USD 1.48 billion), margarine (USD 778.22 million), and others such as coconut oil, stearic acid (from palm oil), cooking oil, laundry soap, bath soap, glycerol, desiccated coconut, copra, coconut flour, and stearin.

From these data, palm cooking oil, palm oil (CPO/PKO), olein, and margarine as products and derivatives of palm oil generated export values totaling USD 21.26 billion in 2015. Meanwhile, the export value of crude oil and oil products in the same year amounted to USD 10.68 billion. Thus, in 2015, the export value of palm oil was nearly twice that of crude oil.

Moreover, the export value of the coconut/palm oil processing industry group in 2015, amounting to USD 20.75 billion, nearly matched the value of oil and gas exports, which stood at USD 24.25 billion. Referring to data published by Indonesia Investment (2016), Indonesia's palm oil production in 2015 reached 32.5 million tons, of which 26.4 million tons or 81.2% were exported, earning USD 18.6 billion or approximately IDR 250 trillion in foreign exchange.

According to the Central Statistics Agency (BPS) (2016), Indonesia's total exports in 2015 amounted to USD 150.25 billion, a 14.62% decrease compared to 2014. Non-oil and gas commodity exports reached USD 131.70 billion, down 9.77% from 2014.

Based on BPS data, this means that in 2015, oil and gas exports earned USD 18.55 billion, while palm oil exports in the same year totaled USD 18.60 billion. Such revenue was generated from palm plantations covering 11.3 million hectares and producing 32.5 million tons of crude palm oil (CPO). What then is the contribution of palm oil exports to the total export value and to the oil and gas commodity export value in 2015? Palm oil contributed 12.38% to the total export value and 14.12% to non-oil and gas exports.

As noted by JPNN (2016), in the early months of 2016, palm oil exports continued to outpace oil and gas exports. This is because global oil prices remained low, while CPO prices stabilized around USD 600 per ton. It is noteworthy that oil and gas exports still require imports, whereas palm oil is 100% domestically produced. Surprisingly, BPS (2016) data revealed that Indonesia imported USD 24.61 billion worth of oil and gas in 2015, exceeding its export value. Overall imports in 2015 amounted to USD 142.74 billion, resulting in a trade surplus of USD 7.51 billion or approximately IDR 101 trillion. The oil and gas sector is no longer the primary pillar for generating foreign exchange; one of the commodities that can be relied upon and still holds excellent prospects for further development is palm oil.

The volume of palm oil exports (palm oil/CPO and palm kernel oil/KPO) in 2013 reached 22,222,508 tons, generating USD 17.14 billion in revenue. However, based on Indonesian Plantation Statistics (Dirjenbun, 2014), in 2013, palm oil imports (CPO and KPO) amounted to 65,887 tons worth USD 47.48 million. Indonesia's peak palm oil imports occurred in 1989, totaling 412,453 tons valued at USD 224.94 million.


  • Ministry of Industry. (2016). Export Data Report. Retrieved from www.kemenperin.go.id
  • Indonesia Investment. (2016). Palm Oil Production Statistics. Retrieved from www.indonesia-investment.com
  • Central Statistics Agency (BPS). (2016). Trade Statistics Report. Retrieved from www.bps.go.id
  • JPNN. (2016). Economic News Report. Retrieved from www.jpnn.com
  • Directorate General of Plantations (Dirjenbun). (2014). Indonesian Plantation Statistics.

Hastag :

#PalmOilEconomy #IndonesiaExports #PalmOilIndustry #EconomicGrowth #SustainableDevelopment #OilAndGasComparison #ForeignExchange #IndustrialExports #PalmOilProduction #TradeSurplus


Re-wrtite from :

Hidayat, Atep Afia dan M. Kholil. 2020. Industri Sawit Serta Dampak, Ekonomi, Sosial dan Lingkungannya. Penerbit WR. Yogyakarta. (Bagian Dua : Industri Sawit dari Hulu ke Hilir: 4. Minyak Sawit dan Minyak Bumi)


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