Ministry of Industry Increases CPO Industry Downstreaming

INDUSTRY.co.id - Jakarta - The Ministry of Industry continues to spur downstreaming in the palm oil industry sector (crude palm oil / CPO) in order to increase high added value so as to contribute to national economic growth.

"We are trying to get palm oil and its derivatives to be processed and sold abroad. But currently it is being studied so that the product can be sold and there will be no problems later," said Director General of International Access and Industrial Access (KPAII) Ministry of Industry, I Gusti Putu Suryawirawan through his statement in Jakarta on Wednesday (08/22/2018)

Moreover, Tanbahnya, the palm oil processing industry has been able to make a significant contribution to Indonesia because it is the world's largest producer and exporter. The Ministry of Industry noted, on an annual basis, the upstream-downstream palm oil industry contributed 20 billion US dollars in foreign exchange. In addition, this sector also absorbs 21 million people both directly and indirectly.

In fact, Indonesia contributes 48 percent of world CPO production and controls 52 percent of the palm oil export market. Therefore, Indonesia has the opportunity to become the center of the global palm oil processing industry for food, non-food and renewable fuels.

According to Putu, there are three downstream lines in the domestic CPO industry that are still potential to continue to be developed. First, the downstreaming of oleofood complexes, namely industries that process refinery industrial products to produce products between oleopangan (intermediate oleofood) to oleofood products.

"Various oleopangan downstream products have been produced in Indonesia, including palm cooking oil, margarine, vitamin A, vitamin E, shortening, ice cream, creamer, cocoa butter or specialty-fat," he said.

Then, the downstream oleochemical complex, namely industries that process refinery industry products to produce products between oleochemicals, basic oleochemicals to finished products such as biosurfactant products (such as detergent products, soaps, and shampoos), biolubrients (biopubants) and biomaterials (for example bioplastics).

Furthermore, downstream biofuel complex, namely industries that process refinery industry products to produce products between biofuels to finished products, such as biodiesel, biogas, biopremium, bioavtur, and others.

"With regard to downstream biofuel, the government is currently serious about implementing the 20% biodiesel program (B20) in Indonesia, and expanding the use of B20 in all motorized vehicles," said Putu.

Putu believes, the B20 program can increase the utilization of local raw materials and is projected to reduce the import of fuel oil (BBM) by 3.5-4.5 million liters per year or approximately equivalent to 5.5 billion US dollars per year.

"In order to support this, the government is preparing a Draft Presidential Regulation regarding the obligation to mix B20 for the Public Service Obligation (PSO) and non PSO sectors," he added.

Professor of the Faculty of Economics and Business at Padjajaran University (Unpad) who is also a researcher at the Indonesian Chamber of Commerce's Economic Research, Research and Development Institute (LP3E), Ina Primiana explained that the government's strategy to strengthen downstreaming in the palm oil processing industry is one of the solutions to the import ban. Indonesian palm oil to several European Union countries.

"So, the downstream industry in charge of processing oil in the country must be able to produce palm oil processed products in different forms to expand the export market," he said.

He explained, the price of CPO sold raw was only worth USD800-1,000 per ton, equivalent to IDR14.5 million. However, if palm oil is processed for the needs of cooking oil production, the price will increase to 1,000-1,400 US dollars per ton, equivalent to Rp20.3 million.

Meanwhile, other added value increases, if palm oil is processed to be glycerin, fatty acids, fatty alcohol, methyl ester, the price can reach 1,400-2,000 US dollars or equivalent to Rp29 million.

Then, if palm oil is processed for the needs of surfactants, metal soaps, natural lubricants, azelate resin, biopoliol and dimeric acid, it will have a price of up to 2,000-3,000 US dollars, equivalent to Rp43 million.

In fact, if palm oil is processed for cosmetics, soaps, biodiesel detergents, medicines, lubricants, biodiesel, lubricants to paint, the price can penetrate 3,000-4,000 US dollars, equivalent to Rp58 million.