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Palm Oil Industry Has Become the Village’s Economic Wheel

By 23 July 2018October 22nd, 2021Industry News3 min read

Antara/Raisan Al Farisi


The government affirmed that the national palm oil industry has become an economic wheel drive in villages. This is shown from the transaction value of oil palm plantation community and fishermen community, reaching Rp 13.7 trillion per year, with food farmers community as much as Rp 54.6 trillion per year, and the livestock community as much as Rp 24.1 trillion per year.

“That means, oil palm is a village’s economic wheel drive,” said the Deputy Minister for Food and Agriculture of Coordinating Ministry of Economic Affairs, Musdhalifah Machmud, in Jakarta, Wednesday (17/7/2018).

Musdhalifah added that this mainstay commodity also has a role for the country’s foreign exhange, employment absorption, poverty alleviation, and a drive for economic growth in various areas with multiplier effect.

The data shows that palm oil contributes the highest foreign exchange earning for Indonesia in 2017. Oil palm also has a role towards the national Gross Domestic Product (GDP) as much as 3.47%.

“Moreover, approximately 16 million of workers live from oil palm plantation sector, and it also revived other industries. Oil palm also plays a role in poverty alleviation in 190 regencies, affecting aggregates decrease for around 6 million poverty rate in villages between 2005-2016,” he said.

Looking at the data, he continued, the government and stakeholders in palm oil sector keep striving to show that Indonesian palm oil is a safe product for health. This commodity is not the cause of tropical forest destruction (deforestation), not the cause of decline in biodiversity, not the cause of forest and land fires, and not the source of potential increases in CO2 emissions that contribute to global warming and climate change.

Several attempts have been undertaken by the government to support the sustainability of one of Indonesian strategic commodities. First, the establishment of Palm Oil Plantation Funding Agency (BPDPKS) that aims to increase prices, strengthen the downstream industries, and build sustainable palm oil commodities.

Second is  through Smallholder Oil Palm Replanting (PSR) program in order to increase the productivity of the community’s plantation. Third is by stipulating and implementing the Indonesian Sustainable Palm Oil (ISPO), which is the standard of compliance testing towards regulations in Indonesia and certification requirements that refer to the International Standardization Organization.


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