RRI.CO.ID, Pangkalan Bun - Palm oil has developed beyond being a leading export commodity and now plays a key role in Indonesia’s economy.

“Every year, the value of palm oil exports from Indonesia exceeds USD 20 billion. This makes palm oil one of the country’s largest sources of foreign exchange,” said Zaid Burhan Ibrahim, Director of Finance, Risk Management, and General Affairs at the Plantation Fund Management Agency (BPDP) under the Ministry of Finance, in Pangkalan Bun, Central Kalimantan, on Wednesday, July 29, 2026.

Zaid noted that the structure of palm oil exports has shifted. “More than 80 percent of our palm oil exports are now downstream products, rather than crude oil,” he said.

The downstreaming of the palm oil sector has been successful, providing added value to the domestic industry. Examples include crude palm oil (CPO) for food, oleochemicals for consumer goods, and biofuel as an energy source.

Beyond foreign exchange earnings, palm oil contributes to economic growth through the plantation sector, which is expected to account for around 4.5 percent of gross domestic product (GDP) by 2025.

“The palm oil industry is also a vital part of the agricultural sector, which underpins the national economy. The most significant achievement is the role of smallholder farmers, who contribute 41 percent to Indonesia’s palm oil industry,” Zaid said.

Smallholder farmers produce more than 16 million tons of palm oil annually. “This shows they are not just complementary, but a vital part of the national supply chain,” he added.

The palm oil sector also provides employment for around 16.5 million people, including plantation workers as well as those in transportation, logistics, and the MSME sector.

Given its significant contribution, the government continues to encourage productivity. BPDP is implementing the Smallholder Oil Palm Replanting (PSR) program, which provides grants to smallholder farmers.

The grant amounts to IDR 60 million per hectare per person, up to a maximum of four hectares, enabling farmers to rejuvenate aging palm trees with declining productivity.

Zaid emphasized that the biggest challenge in developing palm oil is increasing productivity without expanding land. (Misni Parjiati)