Directorate Investment Planning for Agribusiness and Other Natural Resources, March 2014

Palm Oil
INVESTMENT OPPORTUNITIES IN AGRIBUSINESS
2014 by Indonesian Investment Coordinating Board. All rights reserved
invest in

Palm Plantation and Oil Palm Industry

Outlook, investment opportunities, regulation and incentives
Palm Oil Industry Outlook
-
10
20
30
40
50
60
-
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
2009 2010 2011 2012
T
o
n
n
e
s

T
o
n
n
e
s

Palm Oil Production, Export and Import
(000 Tonnes)
ekspor produksi impor
More than 90% of Indonesia palm oil is for export.
Downstream regulation is needed to increase the value added of
Indonesia palm oil.
Source: Buku Statistik
Pertanian 2013
export production import
World Production of Palm Oil
Commodity Country Production
(000 tonnes)
%
Crude Palm Oil Indonesia 23.672 47,1
Malaysia 18.785 37,4
Thailand 1.600 3,2
Colombia 966 1,9
Nigeria 940 1,8
Palm Kernel Oil Indonesia 2.581 42,6
Malaysia 2.014 33,3
Nigeria 556 9,2
Thailand 165 2,7
Brazil 117 1,9
Palm Kernel Indonesia 6.540 44,6
Malaysia 4.850 33,0
N igeria 1.200 8,1
Thailand 368 2,5
Colombia 213 1,4
The Big Five of Palm Oil Producers
2012

Source: FAOstat
Palm oil industry is an
important industry for
Indonesian economy and it is
the main commodity to
generate income for Indonesia.

For the period of 2010-2014
Indonesia is predicted to
generate income as big as
US$80.9 billion from export of
CPO.

(Source: Buku kajian BKPM 2013)
FDI
2009 2010 2011 2012 2013
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
5 132,540.6 131 723,767.1 164 1,130,445.8 220 1,482,605 314 1,478,179.8
DDI
2009 2010 2011 2012 2013
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
12 2,067,686 143 8,488,517.7 165 8,954,515.1 155 8,910,969.5 183 6,393,719.4
Investment Realization of Oil-Producing Fruit Crops
(Oleaginous)
Investment Realization of CPO and Cooking Palm Oil
FDI
2009 2010 2011 2012 2013
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
Project
Investment
(US$ 000)
na na 14 9,68.5 18 29,485.6 46 81,816 101 270,098.9
DDI
2009 2010 2011 2012 2013
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
Project
Investment
(Rp Million)
na na 5 256.930,3 7 660.325,8 13 656.543,6 62 4.127.994,8
Investment Realization on Downstream Industry of Palm Oil
Source: BKPM, 2014
Indicator
North
Sumatera
South
Sumatera
Riau
West
Kalimantan
West Java East Java
West
Sulawesi
Region
Kuala
Tanjung
Tanjung Api-
api, Banyuasin
Pelintung,
Dumai
Pontianak Bekasi Gresik Mamuju
Investment
Opportunity
-Biodiesel
- Fatty acid
- Olein
-Margarine
-Biodiesel
-Olein
-Margarine
-Biodiesel
-Olein
-Fatty acid
-Margarine
-Olein
-Stearin
- Biodiesel
- Olein
- Fatty acid
- Soap
- Margarine
-Biodiesel
-Olein
-Fatty acid
-Soap
-Margarine
-Olein
-Stearin
Upstream
Industry
Integrated Integrated Integrated Integrated
Not
integrated
Not
integrated
Integrated
Downstream
Industry
Undirect Not connected
Not
connected
Not
connected
Integrated Integrated
Not
connected
Supporting
Industry
Not
connected
Not connected
Not
connected
Not
connected
Integrated Integrated
Not
connected
Investment Opportunities in Palm Oil Downstream Industry
Source:Kajian BKPM 2013
Indicator
North
Sumatera
South
Sumatera
Riau
West
Kalimantan
West Java East Java
West
Sulawesi
Region
Kuala
Tanjung
Tanjung
Api-api,
Banyuasin
Pelintung,
Dumai
Pontianak Bekasi Gresik Mamuju
Infrastructure
Port
Private
owned
Shallow
Private
owned
Private
owned
Crowded Short draft
Private
owned
Road Good Damage Damage Damage Good Good Good
Industrial Estate Available Land only Available Available Available Available Planning
Utility
Electricity
Not
sufficient
Not
sufficient
Not
sufficient
Enough Good Good Enough
Gas
Not
sufficient
Not
sufficient
Not
sufficient
Enough Good Good Enough
Water Enough Enough
Not
sufficient
Not
sufficient
Good Enough
Not
sufficient
Land Available Available Available Available Available Available Available
Human resources
*)
Unstable Stable Stable Stable Unstable Unstable Stable
Investment Opportunities in Palm Oil Downstream Industry
Source:Kajian BKPM 2013
*) Unstable: exposed to demonstration
Investment Opportunities Ready to Offer
Cooking Palm Oil Industry in East Kutai
The Provincial Government of East Kalimantan aim to develop 1 Million Ha of Palm. In
addition to cooking oil production, other downstream industries are also encourage i.e.
margarine, soap, cosmetic, pharmaceutical etc.



Palm Oil Downstream Industry in Bengkulu
The Provincial Government of Bengkulu is offering investment in palm oil processing
industry from fresh fruit to CPO with capacity of 30 tonnes/hour from 18 units in the
District of Seluma and District Kaur.


More info: http://regionalinvestment.bkpm.go.id/newsipid/id/index.php

Negative Investment List Presidential Regulation No.36 of 2010
Business Field KBLI Condition
Crop plant cultivation for an area less than
25 Ha
(Palm plantation)

01262 Reserved for Micro, Small, Medium
Enterprises and Cooperatives
Seeding plantation business for a land area
that is less than 25 Ha (Palm plant)

01262 Reserved for Micro, Small, Medium
Enterprises and Cooperatives
Plantation processing products business
industry below certain capacity according
to Regulation of Minister of Agriculture
No.26 of 2007 and/or its amendment
(Palm Oil Industry)

10431 Reserved for Micro, Small, Medium
Enterprises and Cooperatives
Plantation business for an area of 25 Ha or
over, up until a certain area according to
Regulation of Minister of Agriculture No.26
of 2007 without processing unit
(Palm plantation)
01262 Maximal foreign ownership 95%
with recommendation of the
Minister of Agriculture cq the
Director General of Plantations
Business Field KBLI Condition
Seeding plantation business for 25 Ha area
of land or more
01262 Maximal foreign ownership 95%
with recommendation of the
Minister of Agriculture cq the
Director General of Plantations
Product processing plantation business
industry (similar capacity or exceeding a
certain capacity, according to Regulation of
Minister of Agriculture No.26 of 2007
and/or its amendment

10411
and
10432
Maximal foreign ownership 95%
with recommendation of the
Minister of Agriculture cq the
Director General of Plantations
Plantation business for 25 Ha area of land
or more, integrated to the processing unit
by the same capacity or exceeding a
certain capacity according to Regulation of
Minister of Agriculture No.26 of 2007
and/or its amendment
01262
and
10431
Maximal foreign ownership 95%
with recommendation of the
Minister of Agriculture cq the
Director General of Plantations
Negative Investment List Presidential Regulation No.36 of 2010
Investment Incentives

Tax Allowance for certain business fields and/or certain areas (PP 1 of 2007 jo PP 62
of 2008 jo PP 52 of 2011) for all palm oil downstream industries (KBLI 10432, 10490,
10412, 20115, dan/atau 38211)

Tax Holiday for certain palm oil downstream industry (considered pioneer) in
accordance to Regulation of Minister of Finance No. 130/PMK.011/2011 on Tax
Holiday on Corporate Income Tax

Free of Import Duty on importation of machine, goods and materials for
constructions and development of industry in accordance to Regulation of Minister
of Finance No.76 of 2012).
Restructuring Custom Exit for CPO and its products in accordance to Regulation of
Minister of Finance No.75 of 2012 jo PMK No. 128 of 2011.

Restructuring custom exit for CPO and its products is needed to:
Guarantee the availability of palm oil as the raw material for domestic industry;
Secure the supply and the price of palm oil in Indonesia;
Support the National Program of Downstream Palm Oil Industry.
Custom exit for CPO & PKO is imposed after the producers of CPO gain profit (minimal
custom exit is imposed when the CPO price is more than US$ 750/tonnes, while the
production cost is around US$ 500/tonnes).

Custom exit for downstream products is lower than the upstream products to support the
development of downstream industries for CPO.

Custom exit for cooking oil is considered low, with custom exit for packed cooking oil is
lower than bulk products to support national branding.

Additional range of products which is imposed by custom exit of for hydrogenated
products, oilcake, and raw materials for industry.

Restructuring Custom Exit for CPO and its products
PMK no.75 of 2012 jo PMK no. 128 of 2011
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