CPO producers convene to resolve problems

CPO producers convene to resolve problems

Adianto P. Simamora, The Jakarta Post, Jakarta

The country's palm oil producers gathered here on Friday for a
two-day congress to discuss ways to resolve the pressing problems
faced by the industry.

The fifth congress of the Indonesian Palm Oil Producers
Association (Gapki) was officially opened by President Megawati
Soekarnoputri in a ceremony at Merdeka Palace.

The congress will also select new board members for the next
two-year period.

Gapki chairman Derom Bangun said in his report to Megawati
during the opening ceremony that the crude palm oil (CPO)
industry had been facing a number of difficulties such as
security problems and the poor implementation of the autonomy law
by regional administrations.

He said that the provincial and district governments had been
too aggressive in collecting revenue by imposing various levies,
which in turn had placed a heavy burden on CPO producers.

He explained the levies had increased the price of fresh fruit
bunches, and were discouraging new investors from entering the
industry.

"We are waiting for help from the central government to solve
the problems and to maintain a conducive investment climate at
home," Derom said.

The new autonomy law which gives greater power to local
governments in managing their affairs was launched in 2001. But
following criticism from many businesses, the government is now
planning to revise the law.

Derom also voiced concern over the lack of research on CPO in
the country, urging the government to set up a special research
institute to help develop the industry.

Indonesia is the second largest CPO producer in the world
after Malaysia.

The latter has established a special institute called the
Malaysian Palm Oil Board (MPOB).

The Indonesia Chamber and Commerce and Industry (Kadin)
earlier urged the government and industry players to set up a
coordinating board for the CPO industry to help coordinate
policies and solve lingering problems.

The country's CPO producers are also facing problems in
winning new overseas markets due to the lack of promotional
activities.

Malaysia has been on an aggressive marketing campaign to boost
its CPO exports and it has marketing representative offices in
several countries.

Gapki had also been asking the government to drop the three
percent export tax on CPO to help increase the competitiveness of
the commodity overseas.

CPO is the raw material used in the production of cooking oil,
which is considered a strategic commodity in this country, where
the people are partial to fried food.

The government imposed the export tax on CPO amid fears that
rising CPO prices in overseas markets could prompt local
producers to export their palm oil products and raise the price
of cooking oil at home.

Elsewhere, Derom reported to Megawati that the country's palm
oil plantation areas had increased from 0.6 million hectares in
1985 to 3.2 million hectares at present.

"The 3.2 million hectare plantation area has absorbed some
800,000 workers directly, and another 2 million indirectly," he
said.

Derom estimated the country's export of CPO and its derivative
products would reach 5.6 million tons this year, slightly higher
than the initial target of 5.5 million tons.

The association is also optimistic that this year's CPO output
target of nine million could be achieved.

Indonesia produced 8.3 million tons last year and exported 4.9
million tons.

During the opening ceremony on Friday, Megawati said the
country's CPO producers should take initiatives to seek new
markets overseas to boost exports.

"We must be proactive (in seeking new markets), rather than
waiting for new buyers to come to us," Megawati told the 105
participants of the congress.

Megawati was accompanied by Minister of Agriculture Bungaran
Saragih.

Bungaran urged the local producers to boost cooperation with
local communities to develop its CPO industry as all the
plantation areas were located in remote places.

"Community development is a must, they will be the best
security for the plantations," Bungaran said in his opening
speech.