Govt plans world's largest oil palm plantations

Rendi A. Witular, The Jakarta Post, Jakarta

The government is working on the development of the world's largest integrated oil palm plantation, including processing facilities, which would run along the 850 kilometer-long border with Malaysia in Kalimantan.

The government expects more than 500,000 jobs will be created through the project and oil palm production will increase by some 2.7 million bunches annually, Minister of Agriculture Anton Apriyantono told The Jakarta Post recently.

The establishment of the plantation -- which will start producing by 2010 -- and its supporting industry is estimated to cost approximately Rp 5.5 trillion (some US$567 million) over the next five years.

"The project is aimed at strengthening our border against our neighbor Malaysia, as well as reducing the prosperity gap between our people living along the border and those in Malaysia," said Anton.

Anton said his ministry was tasked with coordinating the development of the plantation, including attracting local and foreign investors and providing seedlings and farming equipment.

Foreign investors interested in the business are required to form a joint venture with local investors, he added.

Due in part to a lack of development, the border between Indonesia and Malaysia in Kalimantan has become a haven for illegal loggers, many backed up by law enforcers, in smuggling out logs from protected forests.

Anton said the government would initially focus on developing oil palm plantations in several regencies including Sambas, Bengkayang, Sintang and Sanggau in East Kalimantan, and in Kapuas in Central Kalimantan.

"The end-product can be exported overseas or sold on the local market for developing biodiesel fuel, which is much needed to help reduce the domestic consumption of subsidized premium gasoline. Therefore, the plantation has huge prospects," said Anton.

Aside from oil palm, several areas near the border will be cultivated as rubber plantations with an estimated output of some 135,000 tons of dried rubber annually, he said.

The development of the plantations will involve the Ministry of Manpower and Transmigration in providing workers, the Ministry of Public Works in building roads and opening up access, and the Ministry of Forestry in land acquisition.

Ministry of Manpower and Transmigration Fahmi Idris told The Jakarta Post his ministry would intensify transmigration programs for recruiting unemployed people in densely populated provinces, such as those in Java, to be relocated into the planned plantation areas.

"We are currently working with the Ministry of Agriculture on the mechanism to relocate unemployed people or farmers from densely populated provinces to border areas under the transmigration program," said Fahmi.

Indonesia is the world's second largest exporter after Malaysia of oil palm -- a raw material for, among other things, cooking oil, soap and detergent.

Output from the two countries makes up about 85 percent of yearly global oil palm production.

According to data from the Central Statistics Agency (BPS), the country produced about 12 million tons of crude oil palm last year, with about 8.66 million tons exported to China, India, Pakistan, Bangladesh and the Netherlands.