GAPKI Reveals Obstacles to Palm Oil Investment, Regulation Key - Hallo Riau
JAKARTA – Legal certainty is considered a determining factor in driving the realisation of downstream investment in the palm oil sector by 2026.
The Chairman of the Indonesian Palm Oil Entrepreneurs Association (GAPKI), Eddy Martono, stated that the national palm oil industry’s structure has currently developed strongly in the downstream sector. Around 90 per cent of Indonesia’s palm oil exports are now in the form of processed products.
According to him, this condition means that new investment directions are no longer focused on large-scale expansion, but rather on improving operational efficiency, reducing emissions, and optimising existing assets.
Nevertheless, Eddy emphasised that without legal certainty and clear regulations, business actors tend to hold back on expansion even though investment opportunities remain open.
“Business actors need legal certainty and business certainty so that operations can run sustainably,” he said, quoted on Tuesday (28/4/2026).
He explained that investments in the palm oil sector are long-term and capital-intensive. For example, building methane capture facilities to process waste into energy can cost up to around Rp40 billion per unit.
In addition, the replanting programme, which is key to increasing productivity, also requires legal guarantees, particularly regarding land status.
Eddy also highlighted the lack of certainty in the process of extending Business Use Rights (HGU) applications submitted by several business actors. This situation is seen as capable of holding back investment decisions.
“If there is no approval yet, business actors will hesitate to continue investments,” he said.
He added that legal certainty is not only related to land permitting, but also to policies that affect company cash flow. One of them is the plan to retain 50 per cent of export proceeds, which is seen as potentially pressuring company liquidity.
On the other hand, the government is targeting a significant increase in national investment realisation over the next five years. Based on the planning compiled by Bappenas, the investment target for the 2025–2029 period is projected to reach more than Rp13,000 trillion, up from an achievement of around Rp9,100 trillion in the 2014–2024 period.
The Minister of Investment/Head of BKPM, Rosan Roeslani, said the target is still realistic to achieve despite the significant increase.
He added that Prabowo Subianto has instructed regulatory reforms to eliminate investment barriers. This step is expected to improve Indonesia’s competitiveness in the ASEAN region and globally, including against Organisation for Economic Co-operation and Development standards.