CPO exports to increase to 6.2m tons

Adianto P. Simamora, The Jakarta Post, Jakarta

The country's crude palm oil (CPO) export will increase to 6.2 million tons next year, from an estimated 5.6 million tons this year, spurred by strong prices and rising national output, according to the Indonesian Palm Oil Producers Association (Gapki).

Gapki chairman Derom Bangun said the CPO output was predicted to increase to 9.6 million tons, from an estimated 9 million tons this year.

"The price could rise to an average US$420 per ton next year, from an average of $400 this year " Derom told The Jakarta Post at the closing of a two-day GAPKI congress on Saturday.

The congress reelected Derom as chairman for the next three years.

The congress, which was officially opened by President Megawati Soekarnoputri on Friday, also elected agriculture minister Bungaran Saragih and trade and industry minister Rini M. Soewandi as members of the board of trustees.

The biannual congress discussed pressing problems faced by the CPO industry across the country.

During the congress, many participants voiced concerns over the poor implementation of the Autonomy Law.

They said that the provincial and district governments had been aggressive in imposing various levies on the industry to collect more revenue, which had placed a heavy burden on CPO producers.

"We are used to various kinds of levies imposed by the regional governments and bribery practices. But, now, the number of levies have increased due to the Autonomy Law," Ibrahim Pidie, president director of Fajar Baizury Group, which operates a 8,000-hectare palm oil plantation in Aceh, told The Post.

The Autonomy Law of 1999, which took effect in 2001, gives regional governments greater power to manage their own political and economic affairs.

CPO producers in Aceh also have to pay bribes to various groups to avoid trouble while transporting their goods to Belawan Port in North Sumatra, Ibrahim said.

Mahyudin Nawawi, president director of PT Tri Sangga Guna, which operates a 7,000-hectare plantation in West Sumatra, also voiced concerns about the numerous levies imposed by the regional government, saying it increased the price of fresh fruit bunches.

He urged the central government to coordinate with local administrations to create a conducive climate for CPO investors to do business.

Other participants of the congress also cited security problems, weak legal enforcement, poor infrastructure, and banks' reluctance to extend credit as problems confronting the industry.

Indonesia is the world's second largest CPO producer after Malaysia.