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INDONESIAN PALM OIL DOWNSTREAM

INDUSTRY

Ministry of Industry Republic of Indonesia

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INDONESIAN PALM OIL DOWNSTREAM INDUSTRY

Original Text & Photograph By :InfoSAWIT Magazine

Copyright protected by lawsProhibited quote or reproduce all or

part of the contents of this book without written permission publisher

www.infosawit.comKomplek Bukit Permai, Jl. Anjasmoro G2 No. 1Cibubur, Jakarta Timur - Indonesia

2011, Ministry of Industry Republic of Indonesia PT. Mitra Media Nusantara

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Photo by: PT Astra Agro Lestari

TABLE OF CONTENTSGreetings Ministry of Industry

Chapter I, Indonesian Oil Palm Plantation Industrya. Indonesia Oil Palm Plantationsb. The Spread of Oil Palm Plantationsc. Productivityd. Indonesian Palm Oil Productione. Palm Oil Millsf. CPO Exports per Country and Its Derivatives

Chapter II, Palm Oil Downstream Industrya. Refineryb. Oleochemicalsc. Biodiesel

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7

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Chapter III, Industrial Areaa. Sei Mangkeib. Dumai, Riauc. Maloy

Chapter IV, Government Support

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MESSAGE OF MINISTER OF INDUSTRY OF THE REPUBLIC OF INDONESIA

onINVESTMENT PROMOTION FOR NATIONAL PALM-OIL BASED INDUSTRY

YEAR 2011

Indonesia is now the world’s largest Crude Palm Oil (CPO) producer with an estimated production of 20 million tons in 2010 and it will keep growing due to the expansion of oil palm plantation and land productivity improvement. From year to year, oil palm plantation area has increased by 11,8% with a total range of 8,1 million ha in 2010 and CPO production level has also increased by 12% per year in the last 10 years. However, it should be noted that the CPO exported is in raw form which means that the added value of production such as oleo food and oleo chemical is still enjoyed by other countries. With the vast potential availability of raw materials such as CPO and CKPO (Crude Palm Kernel Oil), Indonesia is very likely to be a

key player in the CPO derivatives industry (oleo food and oleo chemical). The growth in oleo food and oleo chemical industry will be able to increase the national economic dynamics which leads to increase in people’s welfare.

The effort to increase the CPO downstream industries is initiated by investment promotion so that it will draw Foreign Direct Investment for the development of the industry. The aim of the investment promotion itself is to promote the industry potential, filtering investment potential and expand the marketing network of Indonesian oil palm derivative products. This is very important in order to bring Indonesian CPO products to the international market network and increase foreign capital inflow to Indonesia. The Indonesian government has designed several programs concerning oil palm derivative industries to integrate the chain between the downstream and upstream industries which have the potential to increase the competitiveness of oleo food and oleo chemical industries in the global stage. Some clusters which are ready to be offered for potential investors are Sei Mangkei – North Sumatera, Dumai and Kuala Enok – Riau, and Maloy – East Kalimantan. In the future, the location of oil palm derivative industries will expand to West Kalimantan, Central Kalimantan and Papua.

I welcome and support the “2011 National Oil Palm Industry Promotion Event”. With this event, I hope that Indonesian CPO products will be more well-known internationally so that in the future we can expect more investments dedicated to the development of oleo food and oleo chemical products. I hope that this event will bring out valuable contribution to the development of palm oil based industries in Indonesia.

MINISTER OF INDUSTRY

MOHAMAD S HIDAYAT

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CHAPTER I INDONESIAN OIL PALM PLANTATION INDUSTRY

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PT Sa

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A. INDONESIA OIL PALM PLANTATIONSOil palm plantation from year to year increase, was recorded in 2009, the Indonesian oil palm plantation area reached 7.9

million ha with an average annual growth of 11.8%. In 2010, oil palm plantation area in the prediction of 8,1 million ha, which an ownership composition of 43% of farmers, country states 8,5% and the remaining 48,5% large private estates.Source : Ministry of Agriculture Republic of Indonesia, Gapki, InfoSAWIT Data Center, 2011.

6

Indonesian Oil Palm Plantation Area

Explanation 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Wide Area (ha)

4,158,079 4,713,435 5,067,058 5,283,557 5,284,723 5,453,817 6,594,914 6,766,836 7,008,000 7,900,000 8,100,000

*) Gapki Prediction

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B. THE SPREAD OF OIL PALM PLANTATIONSAt the beginning of its development, many cultivated oil palm plantations in Sumatra, in particular North Sumatra.

In 2011, even a century present commercial oil palm plantations in Indonesia. The development also no longer focused on the island of Sumatra but to the island of Kalimantan, Sulawesi, and Papua. Source : Ministry of Agriculture Republic of Indonesia, Ministry of Forestry Republic of Indonesia, InfoSAWIT Data Center, 2010.

RiauPlantations: 1,623,458 HaCPO: 5,072,834 Ton

West Kalimantan :Plantations: 476,891 HaCPO: 1,140,639 Ton

East Kalimantan :Plantations: 368,504 HaCPO: 370,671 Ton

Central Kalimantan :Plantations: 709,206 HaCPO: 1,352,934 Ton

South Sumatera :Plantations: 718,068 HaCPO: 1,829,609 Ton

South Sulawesi :Plantations: 133,493 HaCPO: 429,388 Ton West Papua :

Plantations: 33,646 HaCPO: 80,328 Ton

Papua :Plantations: 25,926 HaCPO: 56,738 Ton

Nangroe Aceh Darussalam :Plantations: 274,135 HaCPO: 709,021 Ton

North Sumatera :Plantations: 1,026,644 HaCPO: 3,200,673 Ton

West Sumatera :Plantations: 305,871 HaCPO: 839,640 Ton

Jambi :Plantations: 454,771 HaCPO: 898,640 Ton

Photo by: PT Astra Agro Lestari

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C. PRODUCTIVITYProductivity of Indonesian CPO reached an average of 3 tons/ha/year, quite stable in 2009. Currently the

government is working to improve the productivity of Indonesian CPO by applying best management practice in oil palm plantations, in addition to continue to produce oil seeds.Source : Ministry of Agriculture Republic of Indonesia, Gapki, InfoSAWIT Data Center, 2011.

Indicator Unit 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Productivity Kg/Ha 2,78 2,84 2,91 3,05 2,83 2,93 3,50 2,99 2,74 2,94 2,98*) Prediction

D. INDONESIAN PALM OIL PRODUCTIONIndonesia’s CPO production during

the last ten years continues to increase with growth of about 12% each years. Source : Ministry of Agriculture Republic of Indonesia, InfoSAWIT Data Center, 2010.

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*) Prediction

Indonesian CPO Production 2000 – 2010

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E. INDONESIAN PALM OIL MILLSPalm oil mill (POM) is one of the production supply chain in

the palm oil industry which serves as a post processing of fresh fruit bunches (FFB) oil into crude palm oil (CPO). Until now POM in Indonesia noted there are about 608 units with a capacity of total production reaches 34,280 tons FFB/hour, spread over 22 provinces. Sources: Director General of The Agro Industry, Ministry of Agriculture Republic of Indonesia, 2010.

Distribution of Indonesian Palm Oil Mills

No. ProvinceAmount of Palm Oil Processing

Industry

Production Capacity (ton/

ffb/hour)

1. NAD 25 980

2. North Sumatra 92 3,815

3. West Sumatera 26 1,645

4. Riau 140 6.660

5. Riau Islands 1 40

6. Jambi 42 2,245

7. East Sumatera 58 3,555

8. Bangka Belitung 16 1,235

9. Bengkulu 19 990

10. Lampung 10 375

11. West Java 1 30

12. Banten 1 60

13. West Kalimantan 65 5,475

14. Central Kalimantan 43 3,100

15. South Kalimantan 15 770

16. East Kalimantan 29 1,545

17. Central Sulawesi 7 590

18. South Sulawesi 2 150

19. West Sulawesi 6 260

20. Southeast Sulawesi 3 260

21. Papua 3 140

22. West Papua 4 360

Indonesia 608 34,280

Photo by: PT Astra Agro Lestari

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F. EXPORTS OF CPO AND ITS DERIVATIVES

Total export of Indonesia CPO and derivatives in 2010 : 15.656.350 tonSouces : GAPKI , 2010.

India

5,000,000

4,500.000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0European

UnionChinaBangladesh Pakistan USA Others

5,500,000

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CHAPTER IIPALM OIL DOWNSTREAM INDUSTRY

Policy Development of Palm Oil Downstream Industry

Potential of palm oil as raw material for downstream industries is required, to produce products with safe and environmentally friendly benefits when consumed. Government through the Ministry of Industry issued a policy for the development of downstream palm oil industry following :

1. Palm Oil Downstream Industry plays an important role in the national economy, especially as foreign exchange, create employment and basic needs providers community.

2. Since 2006, Indonesia has become a producer of crude palm oil (CPO), which is a combination of CPO and CPKO, the largest in the world with total CPO production of 16 million tons, while Malaysia is only about 14,9 million tons.

In 2008, the national CPO production reached 18,8 million tons, while Malaysia amounted to 17,7 million tons. In 2009, Indonesia’s CPO production reached 20,2 million tons and is predicted in 2020 will reach 40 million tons.

3. Based on Presidential Regulation No. 28 of 2008, abour of National Industrial Policy, palm oil processing industry (derivative CPO) is one of the priorities to be developed and have higher added value, such as industry of oleofood, oleochemical, energy and pharmaceutical.

4. In Regulation of Industrial Ministry No. 111/M-IND/PER/10/2009 about the Guide Map (Road Map) Development of Palm Oil Industry Cluster, said that development of palm oil downstream industry cluster medium term (2010-2014) will focus on North Sumatra, Riau and long-term will be integrated in East Kalimantan, West Kalimantan, South Kalimantan and Papua.

5. Basic strategy development IHKS by encouraging the processing of crude palm oil (CPO) until the third product derivatives (among others metalic salt, fatty amine, fatty alcohol, fatty amide) in this country, at least 50% of the total national production of CPO prior to export in 2015.

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TREE DOWNSTREAMPALM OIL INDUSTRY

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FRESH FRUIT BUNCH(FFB)

Source: Ministry of Industri Republic of Indonesia, 2011.

OLEIN AMINO ACID Vit. A,E CAROTEN LIPASESINGLE CELL PROTEIN

COOKINGOIL

SALADOIL

METILESTER

METILESTER

COCOA BUTTER SUBSTITUTE (CBS)

CONFECTIONERIES

MARGARINE

COSMETICS

SHORTENING

SOAP

VEGETABLE GHEE

VANASPATI

FATPOWDER

WASHSOAPSHORTENING

TROGLYSERIDA, DIGLYSERIDA, MONOGLYSERIDA

SURFACTAN BIODIESEL

STEARIN ICE CREAM SOAP CHIP

GLICEROL FOODEMILSIFIER

POLYETHOXYLATE DERIVATIVES:

PALMITAT/ETHYLENEPROPYLENE OXIDE

STEARAT/ETHYLENEPROPYLENE OXIDE

OLEIC ACID DIMER ETHYLENE

PROPYLENE OXIDE

METALIC SALT:

OLEAT / Ba

PALMITAT STEARAT / Ca, Zn

STEARAT / Ca, Mg

STEARAT / Al, Li

OLEAT / Zn, Pb

ESTER ASAM LEMAK:

PALMITAT/PROPAND

STEARAT

METIL ESTER SULFONAT

OLEAT/GLYCOLPROPYLENE GLYCOL

FATTY AMINES :

SECONDARY C16 & C18 / ETHOXYLATED

BETAIN

C16 & C16 / ETHOXYLATED

OXYGENATEDFATTY ACID / ESTER :

EPOXY STEARIC / OCTANOL ESTER

EPTHIO STEARIN MONO & POLYHYDRIC ALCOHOL

ESTER

FATTY ALCOHOL

C16 & C18 ALCOHOL / SULPHATED

C16 & C18 ALCOHOL / ESTERIFIED WITH HIGHER SATURATED FATTY ACID

C16 & C16 ALCOHOL / ETHOXYLATION

MONOGLISERIDAETHOXYLATION

FATTY ACID AMIDES :

STEARAMIDE

ALKANOLAMIDES

SULPHATED ALCANOLAMIDE OF

PALMITAT, STAERIC & OLEIC ACIDS

OLEAMIDE COLOR INFORMATION

ALREADY PRODUCED IN INDONESIA

NOT YET PRODUCED IN INDONESIA

PFAD FATTY ACID

COCOA BUTTER SUBSTITUTE

(CBS)

CRUDE PALM OIL(CPO)

PALM KERNEL OIL(PKO)

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A. REFINERIES Every year, cooking oil processed by refineries often requires

raw materials of CPO around 4 until 5 million tons. Currently, Indonesia has 94 refineries spread across 19 provinces.Source: Central Statistical Agency, Ministry of Agriculture Republic of Indonesia, 2009.

No ProvinceItem of Factories

(Unit)

1 NAD 2

2 North Sumatera 13

3 West Sumatera 3

4 Riau 8

5 Jambi 2

6 South Sumatera 5

7 Lampung 4

8 DKI Jakarta 8

9 West Java 8

10 Central Java 5

11 East Jawa 9

12 Banten 1

13 West Kalimantan 11

14 East Kalimantan 2

15 North Sulawesi 5

16 Central Sulawesi 1

17 South Sulawesi 5

18 Gorontalo 1

19 West Papua 1

Total 94

B. OLEOCHEMICALIn addition to being the largest palm plantations in the world,

Indonesia also continues to develop refined palm oil industry, one of whom oleochemical industry. Until recently, in Indonesia recorded nine basic oleochemicals manufacturer that produces fatty acids, fatty alcohols and glycerine. The installed capacity of fatty acids reach 986,000 tons/year, fatty alcohols reaching 490,000 tons/year, and glycerine to reach 141,700 tons/year. Sources : Apolin, 2010.

Manufacturers and capacity of oleochemical national industry(in 1.000 ton)

No Company Fatty AcidFatty

AlcoholsGlycerine

1 PT Ecogreen (Medan & Batam) 45 350 24

2 PT Sumiasih, Bekasi 91 10

3 PT SOCI MAS, Medan 80 8

4 PT Flora Sawita Chemindo, Medan (Bakrie Group)

50 5,1

5 PT Musim Mas, Medan 320 100 30

6 PT Domba Mas, Kuala Tanjung (Bakrie Group) 60 40 4,6

7 Wilmar Group, Gresik 120 30

8 PT Nubika Jaya, Kisaran 130 20

9 PT Ciasadane Raya Chemical, Tangerang 90 10

Total 986 490 141,7

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Photo by: PT Musim Mas

Photo by: PT Smart Tbk.

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Producers and Capacity Indonesia Biodiesel

No Company Name LocationCapacity

(ton/year)

1 PT Alia Mada perkasa Kosambi, Tangerang 11,000

2 PT Anugrah Inti Gemanusa Gresik 40,000

3 PT Bioenergi Pratama jaya Regency of East Kutai 6,000

Regency of Barau 60,000

4 PT Cemerlang Energi Perkasa Dumai, Riau 400,000

5 PT Damai Sejahtera Sentosa Cooking Rungkut, Surabaya 120,000

6 PT Darmex Biofuel Bekasi 150,000

7 PT Energi Alternatif North Jakarta 7,000

8 PT Eternal Buana Chemical Industries Cikupa, Tangerang 40,000

9 PT Eterindo Nusa Graha Gresik 40,000

10 PT Indo Biofuels Energy Merak 60,000

11 PT Multikimia Intipelangi Bekasi 14,000

12 Musim Mas Group Regency of Deli Serdang 70,000

Batam 350,000

13 PT Pasadena Biofuels Mandiri Cikarang 10,240

14 PT Pelita Agung Agrindustri Bengkalis, Riau 200,000

15 PT Petro Andalan Nusantara Dumai 150,000

16 PT Primanusa Palma Energi North Jakarta 24,000

17 PT Sintong Abadi Regency of Asahan – South Sumatra

35,000

18 PT Sumi Asih Bekasi 100,000

19 PT Wahana Abdi Tritatehnika Sejati Cileungsi, Bogor 132,200

20 PT Wilmar Bio Energi Indonesia Dumai 1,050,000

Total 3,069,44014 15

C.BIODIESELFossil-based energy sources, are now experiencing environmen-

tal constraints and faced increasingly with the depletion of reserves, then the world’s find out for the alternative energy of fossil fuels, one of biodiesel from oil palm (fatty acid methyl esters). Facts palm biodiesel is significantly lower emissions than fossil oil. In Indonesia recorded there are about 20 manufacturers carrying palm biodiesel with a total installed capacity reached 3.07 million tons / year.Source: Aprobi, 2011.

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In order to form a government of national industries to develop six economic corridors, including production centers, crops and granaries in the national energy corridor centered on Sumatra. While the production and processing of mining products focused on the corridor of Borneo. Then to the center of agricultural production and food processing, farming and fisheries enter the corridors of Sulawesi, North Maluku.

Corridor of Java, Bali and Papua, each one for corridor industry supporters and national service, national tourism gateway and processing of natural resources. In order to smooth the distribution of the corridor system the government to develop industrial park to integrate between the upstream and downstream industries.

Especially for developing region-based oleochemical industry, the government established thee strategic industrial area, namely Sei Mangkei in North Sumatra, Dumai in Riau and Maloy in East Kalimantan.Sources : Ministry of Industry Republic of Indonesia, 2011

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CHAPTER IIIINDUSTRIALAREA

Summary Themes of The Economic Corridor Development Indonesia Centers of Production

and Processing of Crops and Granaries

Booster of Industrial and National Services Gate-level tourism national and

supporting the national food

Production and Processing of the Abundant Natural

Resources and Human Resources Prosperous

Central Production and Processing of Mining Products

and Barns National Energy

Production Center and Food Processing for Agriculture,

Plantation and the National Fisheries

Corridors of Sumatera

Corridors of JavaCorridors of Bali and

Nusa Tenggara

Corridors of Papua and Maluku

Corridors of Sulawesi - North Maluku

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A. Industrial Cluster Sei Mangkei, North Sumatra

Industrial area Sei Mangkei is one of three industrial area oleochemicals-based that developed by Indonesia government.

In the first phase built up area of 46 ha (2008-2010) was followed by a second phase covering an area of 104 ha (2010-2011). The third phase will be expanded to 640 ha for the period 2013-2018.

Development area of Sei Mangkei has a total area reached 640 ha, with the support of the supply of raw materials, crude palm oil from Sei Mangkei around area. The distance between the plantation palm oil with industrial area of less than 70 km, so

making it easier in the process of distribution of raw materials. Until now POM in Sei Mangkei capable of producing until 569 tons of FFB/hour.

While for the loading and unloading of CPO was centered in the Port of Kuala Tanjung as exports dock from industrial area Sei Mangkei. From 3 dock in that port, dock B and C are used as a place of delivery of the CPO. Recorded dock B has a length of 150 m, width 19 m and a depth of 6 M.LWS. Meanwhile, dock C has a length of 80 m, width 30 m and a depth of 11 M.LWS.

Infrastructure currently has been built is the availability of water and electricity supply, road access to cluster industrial areas and near with the city. Sources : PT Plantation Archipelago III, 2011.

Supporting Infrastructure Sei Mangkei Country Roads - Highway Construction Kuala Namu to Tebing Tinggi (60 km) - Highway Construction Kuala Namu to Tebing Tinggi (60 km) Ministry of Public

works, Provincial Government

- Increase Internode Capacity Limapuluh to Indrapura to Simpang Kuala Tanjung (25 km)

Ministry of Public Works

- Development of Fly Over Simpang Kuala Tanjung Ministry of Public Works

Province Road Increase Internode Capacity Limapuluh to Perdagangan (11 km)

Provincial Government

District Roads - Increase Internode Capa Simpang Mayang - Kec Bosar

Maligas (14 km)District Government

Trailer Roads Bandar Tinggi to Kuala Tanjung (23 km) Directorate General

of Railways Funding PTPN IIISeaportKuala Tanjung Directorate General

of Sea 16 1716 17

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Development of oil palm biomass-fired power capacity 2x3,5 MWRoad Infrastructure Drainage

Development of palm kernel oil capacity of 400 tons / day

New POM capacity of 45 tons FFB / hour

DEVELOPMENT OF INDUSTRIAL AREAS SEI MANGKEI

- Infrastructure Development .

- Development of Oil Palm Mill Capacity 75 ton FFB/hour .

2009 - 2010- Build Two Biomassa Power

Plant Each with Capacity. - 400 tpd kcp.- Build of Biogas Power Plant

the capacity.

2010 - 2011

2011 - 2012Develop industry of Biodiesel, surfactant, beta-carotene and fatty alcohol

2012 - 2013Develop industry of Biodiesel, surfactant, beta-carotene and fatty alcohol

2013 - 2014- industry based to other

oleochemicals.- Develop oleochemical

derivatives

Photos by: PTPN III

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B. INDUSTRIAL CLUSTER DUMAI, RIAU

Industrial cluster oil palm Dumai precisely located in the province of Riau, a good reason of industrial cluster oil palm built in this area because the area of Riau Province has recorded the largest contribution in the production of CPO in Indonesia. Recorded in 2009 production CPO Riau reach 5 million tons or 27% of the total production of Indonesia’s CPO.

Province of Riau has a palm oil mill (POM) as many as 137 units, and there are 29 units that are non-gardens POM that accommodates farmers’ production. Total CPO production capacity of 5.852 ton/hour. Practical raw material is relatively abundance in Riau.

Not only that local government is also supporting the oil palm industry cluster Dumai with preparing financing infrastructure such as road access. While the private sector is allowed to build industrial area with easy licensing and providing incentives.Sources : Local Government of Riau, 2010.

Production Consumption, Exports and Imports CPO of Riau

DescriptionPeriod 2007

(ton)

CPO Production 5.119.269

Local Consumption 723.901

CPO Exports and Derivatives 5.574.966

CPO import from other province 1.179.597

share of import from other provinces of CPO production Riau 23,04%Source: Central Statistical Agency, SBRC

Broad, CPO Production Volume and Amount POM in Riau

No District Land AreaProduction

VolumePalm Oil Mill

(POM)

1 District Upstream Rokan 275.609 ha 907.424 ton 19 unit

2 District Downstream Rokan 148.879 ha 452.525 ton 20 unit

3 Pekanbaru 4.007 ha 8.505 ton -

4 Dumai City 24.930 ha 50.443 ton 2 unit

5 District Bengkalis 127.259 223.625 ton 3 unit

6 District Siak 183.598 ha 621.139 ton 17 unit

7 District Pelalawan 177.905,5 ha 611.279 ton 15 unit

8 District Downstream Indragiri

142.282 ha 372.977 ton 4 unit

9 District Upstream Indragiri 114.582 ha 365.615 ton 7 unit

10 District Kuansing 121.854 ha 412. 980 ton 11 unit

11 District Kampar 291.475 ha 1.092.758 ton

34 unit

Sources: Official Plantation of Riau, InfoSAWIT Data Center

Plan of Development Oil Palm Industry Riau Province

Potential Land

Palm Oil Industry

CPO Export

Potential Domestic

Market

Export Market

State Ownwd Plantations/ Private Owned Plantations

Oil Palm Farmers

Oil Palm Plantation

Palm Oil Mill (POM)

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Infrastructure SupportThe local government has also allocated 5,000 ha industry, but

currently only used 300 ha by private parties. Port of Dumai can stop off at the boat weighing 20-30 thousand

DWU and loading and unloading of CPO reached 6 million tons/year. While Dumai Port Industrial Area has a depth of 14 m and ac-commodate ships weighing 50 thousand DWT

Dumai Regional ExcellenceHas a strategic position on the path Malacca.•Dumai area of security is relatively good condition.•Located in the coastal areas with relatively high economic growth •(8.65% per year).Hinterland oil palm plantations in Riau area, based on statistics •plantation 2007, a total of 1.612.382 ha, crude palm oil production of 5.119.270 tons, is produced from 130 POM with a capacity of 5.645 tons of FFB /hour.Center of the largest oil producer in Indonesia.•As the exit and entrance, toward the center of business in the •region and international.Has four industrial estates, one of them is private industry area •which operates with an area of 1.000 ha of land, equipped with supporting facilities and infrastructure. Availability of ports and infrastructure (road, telephone and water •supply).There was an area of 5.084 ha a separate industry from residential •area.

Investment in Riau :PT Sari Dumai Sejati (CPO Refeneri capacity 2.500 tons day) and •PKO plant expansion and a Special Port (Pelsus)PT Semen Padang (Pelsus)•PT Ketam Putih (Pelra & Warehouse)•PT Indo BioFuels (Biodiesel Factory)•PT Pacific Inter Link (CPO Refineries Stamp 3.000 ton/day)•PT Berlian Laju Tankers Tbk (Port and Container)•PT Dumai Refinery•PT BKR (Expansion)•

Target The Development Of Downstream Palm Oil Industrial Cluster In DumaiMedium Term Long Term

Increase further processing or diversification palm oil derivatives industry.•For non-food mainly directed at the products : surfactants, biodiesel, lubricants, oils, and additives •for fuels.For food : cooking oil, margarine, tocopherol, etc.•Increase the supply raw materials of CPO/PKO for domestic industries.•Expansion of export market of palm oil derivatives industry.•

Become the largest producer of refined palm oil in •the world.Mastered the technology and business of palm oil •derivative products.

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C. INDUSTRIAL CLUSTER MALOY, EAST KALIMANTAN

Maloy is located in the eastern province of Kalimantan East Kutai. Currently the Maloy area focused on the development of industrial zone and international port (KIPI).

To support the infrastructure of, the government will be build the highway towards Maloy along 130 kilometres (Sangatta-Maloy) and needs of other road facilities on the surrounding is from SP 3 Maloy to the port of Maloy/Bay Machete.Sources : Local Governments East Kalimantan, 2010.

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Industrial Development

Activity Indicator Target PICCooperation between industry CPO and its derivatives with industrial / institutional support / related

Integration of CPO processing industry and its derivates

2011 - 2015

Ministry of Industry, PT Plantation Archipelago III, Indonesia Investment Coordinating Board

Diversification of oleochemical products of high added value through increased R&D

Increasing in new investment and expansion of new businesses based CPO

2011 - 2013

Ministry of Industry

Increase guarantee of supply CPO to domestic industries

Fulfillment of domestic needs

2011 - 2013

Ministry of Industry,Ministry of Agriculture

Investment Promotion

Increased investment in Indonesia

2011 - 2015

Ministry of Industry, Indonesia Investment Coordinating Board, Local Government

Technology development process efficient and environmentally insightful

increasing the capacity of basic oleochemicals industry and its derivatives

2013 - 2015

Ministry of Industry,Indonesia Investment Coordinating Board, The Indonesian Institute of Sciences

Infrastructure

Infrastructure Needs Volume Target PIC

Port

Maloy Port Medium of Support :Land PortsPort BuildingEquipment Aid NavigationalFirefighting FacilitiesEquipment loading and Unloading GoodsField and Stacking

Land of 100 ha

2011 – 2015

Ministry of Transportation, Indonesian Ports, Local Government

Railway

Cross-Estuary Wahau – Lubuk Tukung - Maloy financed by investors from UAE

150 km 2012 - 2015

Ministry of Transportation, PT. KAI, Investment Coordinating Board, Local Government

Road

Balikpapan – Samarinda – Maloy (2010 – 2014, @84 km)Muara Wahau – Sp Perdau – Maloy (2010 – 2014, @39,4 km)Access Port Road (2013)

420 km;

197 km;

10 km,

2011 - 2015

Ministry of Public Works, Local Government

Power Plant

PLTA Lubuk AmbacangPLTU Peranap/CerentiPLTU PekanbaruElectric Transmission DumaiElectric Transmission Tj. ButonElectric Transmission Kuala Enok

2011 - 2015

Ministry of Energy and Mineral Resources, State Electricity Company

Others

Other infrastructure : - Source of clean water- Power plant- Dam and raw water transmission- Public facilities, school of oil palm.

1 Package 2011 - 2015

Local Government, Ministry of Energy and Mineral Resources, Ministry of Public Works, Ministry of National Education

Catalyst

Activity Indicator Target PICRevised PP 62 by adding palm oil downstream industries that have not entered the list of specific industries that have facilities Tax Allowance.

1 Rules 2011 - 2012 Ministry of Economic, Ministry of Industry, Indonesia Investment Coordinating Board

Preparing Legal umbrella provision of Tax Holiday.

1 Rules 2011 - 2012 Indonesia Investment Coordinating Board, Ministry of Economic

Restructuring Tax Exit of CPO and its derivatives.

1 Rules 2011 - 2012 Ministry of Economic, Ministry of Finance

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Government support to develope palm oil down-stream industry in Indonesia, has issued a policy development of CPO processing industry through two schemes like the medium-term schemes (2010-2014) and long-term scheme (2015-2025).

Targets Development Industry Processing CPO Medium-Term

(2010 -2014)

Targets Development Industry Processing CPO Long-Term (2015 -2025)

Ensure availability of raw materials •CPO is quality.Increase and optimization of industrial •capacity utilization.Development industry cluster.•Formation CPO processing industrial •cluster and its derivatives in Sumut and Riau.Development of port facilities storage •tank and infrastructure development.Creation climate of business and •investment that is conducive.Increase inter cooperation and inter-•cluster.Increase of institutional functions.•Development of a pilot project of •indigenous sources of technology and licensing products deep processing.

Expand the development •of downstream products.Formation center of •Exellence oleochemical industry.Market Control.•Stabilization of industry •insightful environmental.Integration of the •industry of refined palm oil in East Kalimantan, West Kalimantan, Central Kalimantan, and Papua.

CHAPTER IVGOVERNMENT SUPPORT

21

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In order to accelerate the development of downstream oil industry, the government will improve the supporting infrastructure elements such as the construction of port facilities and storage tanks (including in Papua and East Kalimantan), credit incentives for small farmers, and providing tax incentives for new investment during the first 3 years. Sources : Ministry of Industry Republic of Indonesia, 2011

Element Supporting of Periodization Increasing Technology.

Medium-term (2010-2014) Long-term (2015-2025)

The pilot project for the Mini Plant •products (scale-up) of the original sources of technology, the license to downstream.Modification and development of •autonomous technology through R&D.

Upgrading industrial technology and biotechnology development of biomass.

In order to achieve the plan of CPO processing industry development, the government has compiled the main points of the action plan, which consists of the principal medium-term action plan (2010-2014) and long-term plan the principal action (2015-2025), as follows :

The principals plan of medium-term action (2010-2014)The Principals plan of long-term

action (2015-2025)

Increasing productivity of crops with the procurement of quality •seeds, fertilizers and plantation revitalization.Increase the quality of palm oil with the implementation GAP. •Capital assistance to farmers.Increase human resource capacity.•Increase the quality of infrastructure to improve industrial •performance.Export controls by imposing PE/BK for CPO and its derivatives.•Modernization of production technology and machinery. •Ease of access to bank credit. •Socialization to the industrial cluster development and institution. •Supporting Industries•Formation of cluster development cooperation forum.•Cooperation between the industry of CPO and its derivatives •with industria/institutional support/related : Integration of CPO processing industry and its derivatives.CPO industrial development towards industrial derived surfactants, •lubricants, and biodiesel.Cooperation between higher education research institutions and •industry.Increase product quality in accordance SNI.•Develop industrial machinery equipment and to develop industry •auxiliary materials.Improving the quality of human resources through the preparation •and implementation of the oil palm industry SKKNI chemical based.Encouraging the role of financial institutions in the provision of •credit services and capital with low interest. Encourage the role of institutions in marketing investment •promotion.Infrastructure development.•Increasing coordination and synergy of related agencies in setting •policy.Incentive policies to support industrial development.•Elimination of regulations that hamper industrial development.•Formation the body of authority development of investment.•

Diversification of oleochemical •product of high value-added.Product innovation and •technology through improved R&D.Providing incentives for actors of •R&D development of derivatives palm oil products. Strengthening linkages between •small and medium-sized companies with large industries in the context of technology transfer. Encouraging market research •activities (market research) in order to seek new orientation and target markets and high added value.Increase in the activities of •industrial technological research and product engineering integrated chemical derivative of palm oil.Fulfillment in the domestic •market and export market expansion. Provision of promotional and •marketing facilities.Technology development process •efficient and environmentally insightful.Application Management Impact •handling of Safety, Security, Health and Environment (K3) in palm oil-based chemical industry.

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Investment Coordinating Board

BKPM is a government section, in order to realize a one-stop service for investment in Indonesia. Through the program of National Single Window for Investment (NSWi) and Information Service System and Electronic Licensing Investment (SPIPISE).

The legal basis is the development of this NSWi :1. The Law No.25 of 2007 about Capital

Investment2. RI Presidential Instruction No. 3 of

2006 about Investment Climate Improvement Policy Package.

3. RI Presidential Instruction No. 6 of 2007 about the Acceleration of Development of Real Sector and Empower of Micro, Small and Medium Enterprises.

4. RI Presidential Instruction No. 5 of 2008 about Focus Economic Program Year 2008-2009.

Regulation is the operationalization NSWi :1. BKPM chief Regulation No.11 Year 2009

on the Procedures for Implementation, Development, and Reporting Services at the One Stop Capital Investment.

2. BKPM chief Regulation No.12 Year 2009 on Guidelines and Procedures for Investment Application.

3. BKPM chief Regulation No.13 Year 2009 on Guidelines and Procedures for Implementation of Investment Control.

4. BKPM chief Regulation No.14 Year 2009 on Information Service System and Licensing of Electronic Investment.

Function of NSWi :NSWi serves as a liaison and facilitator for

the stakeholders with respect to investments in Indonesia. Currently, the parties are connected and can utilize NSWi among others; investors (investors), public, central government agencies, Integrated Services One Team (PTSP), Section Promotion and Investment Co-operation and Investment Section Control Implementation.

INVESTOR

PUBLIC

NSWI

DIVISION OF

INVESTMENT IMPLEMENTATION

CONTROL

PROMTION SECTION &

COOPERATION INVESTMENT

CENTRAL GOVERNMENT

PTSP CENTRAL /

PROVINCIAL / DISTRICT / CITY

SPIPISE has the following purposes :1. Stimulating the creation of a conducive

business climate for investment in Indonesia 2. Increased promotion of cooperation and

investment services with the main partner countries.

3. Improving services, facilities, and advocacy related to investment in Indonesia.

4. Increasing the role of institutional investment and investment information system (SPIPISE).

SPIPISE useful as : 1. Single submission of data & information.2. Single and synchronous processing of data

and information. 3. Single Decision-making for investment

information & licensing process.4. Ease of licensing process tracking.

Process Flow Services :

The flow process of information services and investment services in general are described in the following diagram: Source : http://www.nswi.bkpm.go.id

Pilot project: BATAM & CENTER for the type of permit and non permit investments that are served by Center of BKPM.

PHASE 1

PHASE 2

PHASE 3

Roll out to a potential area that covers 30% of the total investment value in Indonesia, covering the entire license in 4 main sectors: (1) manufacturing, (2) trade, (3) plantation, (4) construction

Continuing the roll out to an area covering 70% of the total investment value in Indonesia, Includes all permissions in all business sectors in Indonesia

1

2

2

STIMULATION

COLLABORATION

SERVICESPROMOTIONWHY

NSWi?

24 PB

http://agro.kemenperin.go.idJalan Gatot Subroto

Kav. 52-53, Jakarta 12950

Ministry of IndustryRepublic of Indonesia