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Bappebti: West Kalimantan Has Great Oil Palm Industry Potential

The Futures Exchange Supervisory Board (Bappebti) assessed that West Kalimantan Province has great potential in the national oil palm industry, so it was chosen to host the 4^th Indonesian CPO Exchange Literacy event.

"West Kalimantan Provincial Government data shows that there are currently 3.4 million hectares (ha) of oil palm plantations that have Plantation Business Permits (IUP)," Bappeti Acting Head Kasan stated while opening the 4^th Indonesian CPO Exchange Literacy in Pontianak City, West Kalimantan on July 4, 2024.

West Kalimantan is in second place in the list of provinces with the largest ​​oil palm plantations area in Indonesia according to Statistics Indonesia (BPS), with its oil palm plantation land reaching 14.9 million ha in 2022.

He added that the government is committed to realizing its Indonesia Gold 2045 vision by turning Indonesia into a developed country and one of the five largest economies in the world. An important step towards that goal is to improve the trade sector in a sustainable manner so that it can make a significant contribution to the economy.

Although global economic growth in 2024 is expected to stagnate due to tightening monetary policy and geopolitical tensions, Indonesia has managed to record a trade surplus for 49 consecutive months.

"In May 2024, the trade surplus was recorded at US$2.93 billion, an increase of 7.7 percent compared to US$2.72 billion in April 2024  This success is the result of collaboration between various parties and a blessing from God," Kasan said.

Non-oil and gas exports, especially from the agriculture and plantation sectors, are one of the main pillars of the trade surplus. In May 2024, non-oil and gas exports reached US$4.26 billion, in which palm oil (CPO) commodities played an important role.

In managing CPO, Bappebti has established the Indonesian CPO Exchange on Oct. 13, 2023. It is hoped that a transparent and fair CPO price which can be a reference for both domestic and international markets could be formed through transactions on the exchange.

"Since starting to operate 8 months ago, the Indonesian CPO Exchange has recorded 17,356 lots of transactions, or 86,780 tons [of CPO], in the January to June 2024 period. However, physical transactions still need to be optimized," he revealed.

Meanwhile, the Trade Ministry has appealed to CPO business actors, especially those in West Kalimantan, to start doing transactions on the Indonesia CPO Exchange as part of efforts to increase CPO market liquidity and confidence. The use of prices based on Bursa Malaysia or Cost, Insurance, and Freight (CIF) Rotterdam is expected to be reduced.

Additionally, the exchange is expected to operate independently, credibly, and reliably both in the national and global markets with the support of valid and up-to-date data and information. Bappebti will also continue to improve its supervision and regulation over the exchange, as well as optimize the function of the Indonesian CPO Exchange Committee.

Recently, the Trade Ministerial Regulation on the CPO Export Reference Price weighted prices from the Indonesia CPO Exchange the most. It is hoped that the determination of the local CPO reference price in the future will be entirely sourced from the Indonesian CPO Exchange.

The prices decided on the Indonesian CPO Exchange are also expected to be a reference in determining the prices of both upstream products, such as oil palm fresh fruit bunches (FFB), and for downstream products, such as biodiesel. The ministries of Agriculture as well as Energy and Mineral Resources are expected to continue to encourage the use of prices from the Indonesian CPO Exchange in related pricing policies.

At the same occasion, Indonesia Commodity & Derivatives Exchange (ICDX) President Director Fajar Wibhiyadi stated that the event is in line with the ongoing socialization program run by ICDX about the Indonesian CPO Exchange's implementation.

"The CPO Exchange is still something new in Indonesia's CPO trading ecosystem. Our task as an exchange is to provide education to stakeholders in the CPO sector throughout Indonesia. We hope that the education could help oil palm industry players in Pontianak understand the benefits of doing CPO trading transactions through the exchange," he explained.

There are 50 palm oil companies that have become members of the ICDX's CPO Exchange. The presence of the CPO Exchange is expected to create a transparent, fair, efficient, and orderly CPO market, so that there is an accountable and credible price discovery process.

"The reference price can be used as the Indonesian CPO Export Benchmark Price for determining export duty and levy rates, reference prices of FFB for oil palm farmers, and reference prices for biodiesel incentives," Fajar concluded.

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