The government is planning to develop regional centers for processing palm oil into biodiesel and other products to boost profit margins and create jobs, a minister said on Wednesday.
The government is seeking investment to produce oleochemicals - used to make household products like soaps, detergents and toothpastes - cooking oils and biodiesel from palm oil, Hatta Rajasa, the coordinating minister for the economy, said at a palm oil conference in Bali.
“At least three areas are ready: Riau, North Sumatra and East Kalimantan,” he said.
The nation is poised for record production of 20.5 million tons of palm oil next year, Achmad Manggabarani, director general for plantations at the Agriculture Ministry, said in September.
Output this year may climb to 20.5 million tons and to at least 21.5 million tons next year, Fadhil Hasan, executive director at the Indonesian Palm Oil Association (Gapki), forecast on Nov. 19.
Indonesia earned $12.4 billion in palm oil revenue last year, making it the country’s largest non-oil and gas export earner, Hatta said.
“We have a potential 18 million hectares of land that can be developed for palm, including 7.9 million hectares of existing areas already planted,” Suswono, the agriculture minister, said at the same event.
“The government will give fiscal or non-fiscal incentives” for the proposed expansion, Hatta said.
He added that the government was planning to improve local infrastructure such as ports, roads and electricity access in those areas.