InfoSAWIT, JAKARTA – The meeting that was led by President Joko Widodo on 10 July 2024 would expand the responsibility of Palm Oil Plantation Fund Management Agency (PO PFMA) in cocoa and coconut plantations. The multiple functions of public service obligation which is managed by Ministry of Finance Indonesian Republic would be realized by making new deputies, they are, deputy of cocoa and deputy of coconut.
The stakeholders in palm oil plantations, all of a sudden, rejected it because it would not be clear how the new mandates would get fund. Meanwhile, the mandate of palm oil fund at PO PFMA is ‘from palm oil, for palm oil’. Cocoa and coconut development should use separated fund from palm oil which derived from palm oil export citation.
It is true that the new mandate would be about to copy/imitate forestry and plantation sectors’ management in Malaysia, making plantation sectors in Indonesia as the economic pillar sustainably and solve institution and permit issues that are still overlapping.
About one century, Dutch East Indies was the king of plantations in the world. Our sugar production was the second biggest number in the world. But now, our sugar production is not in the big ten production in the world.
The same happened in other plantations, such as, coffee, tea, tobacco, that became the economic pillar for Dutch East Indies and other development sectors in the regions. Train industries, for instance, developed to transport the plantation production in Central Java Province.
Now, Indonesia is proud of palm oil only. Palm oil production in Indonesia has defeated Malaysia since 2006 and now mastered 60% of the production globally and 40% of the world production of vegetable oil. Copra production (from coconut) and rubber are the second numbers in the world. Coffee production is number four. Tobacco production is out of number even though the smokers in Indonesia are number four.
That is why in 2015 the government established PFMA that mandated to develop seven strategic plantation commodities, they were, palm oil, coconut, cocoa, rubber, coffee, tobacco, and sugarcane. Sugarcane was actually discussed to be managed by PFMA after palm oil, but there is no clarity until now.
This was regulated by the Government’s Regulation Number 24 / 2015 about Plantation Fund Raising with the special mandate – to develop upstream and downstream plantations, not spices or foods. Ever since, palm oil industries got excited both in the research, education, smallholders replanting program ad downstream in food, oleochemical, and energy products.
The exports keep increasing and now become the big three to revenue contributor. They once were the number one. That is why palm oil fund from export citation could be developed and returned to reinforce palm oil industries.
These successful stories would become the essence of the decision to expand PFMA mandates, to help other plantation commodities to revitalize. That is why the government would conduct some things and solve forestry and plantation institutions’ problems, overlapping of areas, fund, and encourage to get plantation glory in Indonesia.
The first, it needs to establish Ministry of Forestry and Plantation. Malaysia learned from Indonesia in the 70s and established Ministry of Plantation and Commodity. It deals with upstream to downstream plantations, such as, palm oil, sago, wood, meuble, tobacco, kenaf, rubber, jarak pagar, pepper, and biofuel. Malaysia separates ministry of food, plantations, environment, and forestry to optimize economic contribution in plantation and forestry sectors for the people and the country.
What is interesting is that wood and meuble industry is in Ministry of Plantation because wood plantations are considered as the cultivation/economic functions. Meanwhile the function of forest conservation (conservation, national park, et cetera) would be considered in environmental scope.
Indonesia once adopted the concept in the era of President Habibie and Abdurrahman Wahid. Department of Forestry and Plantation was established. The Forestry managed the function of forest and wood economy which was the same with the plantation in land – base, which was, production forest and industrial plantation forest.
The second, it needs to escalate palm oil industrial governance. It was the material in the meeting with president on 9 July 2024. The problem is that overlapping areas between palm oil plantation and forestry that was not getting solution until by the end of 2023. The breakthrough of the solution such as, the lesson from Malaysia is the forestry economic function as regulated in the Laws Number 20 / 2007 abuot the Spatial which is, the cultivation function should be consistently implemented as same as the plantation which functions as cultivation.
This can be realized by combining the cultivation function and cultivation region in production forest and industrial plantation forest with plantations as regulated in the Spatial Laws. That is why it needs single authority of planology in national scale, by combining the planology functions from forestry to Ministry of Agrarian Affairs and Spatial. This ministry in 2019 combined the function of spatial of National Land Agency and Spatial in Ministry of Public Works.
The third, it needs to encourage the climate change mainstream by establishing Ministry of Climate Change and Environment. This ministry would deal with climate change, protected and conservation regions, and environment. The targets would be dealing to minimize carbon in 2030; net zero in 2060, and manage conservation and protected regions, at least, 40% - 50% of the land in Indonesia, from now that may be less than 30%.
The fourth, it needs to get fund management to develop plantations and forestry. This institution would be the big capital, which is, to combine the budget in palm oil that PO PFMA cultivates about Rp 30 trillion. And the fund about Rp 2 trillion from reforestation fund to increase the function of production forests.
Revitalization of cocoa and coconut plantations, funded by export or import citation in the separated account from palm oil fund, would be about to develop and cocoa and coconut replanting program to be sustainable.
For all these years, export contribution in plantation sectors got high enough, in 2023, it reached about US$ 50 billion. 70% of the numbers was from palm oil, much bigger than oil and gas sectors that became net importer. It needs more optimal development to get bigger contribution.
It means, the new government would do development program in plantation sectors and forest economic function consistently and solve overlapping issues between plantations and forestry heading to sustainable Indonesia Emas.
Disclaimer: this article is personal opininon, fully in charge by the writer and has nothing to do with InfoSAWIT.
