CIC

http://www.cic.co.id

BUSSINESS OPPORTUNITY ON PALM OIL INDUSTRI

AND ITS DERIVATIVES IN INDONESIA 2016 - 2020

PREPARED BY
PT CAPRICORN INDONESIA CONSULT
A MEMBER OF
THE CIC CONSULTING GROUP
 Chapter 9
Conclusion

EXECUTIVE SUMMARY

Recently, the role of CPO in the international market is stronger and is

expected to be able to shift the role of other vegetable oils. This is evidenced by
the continuous increase in commodity prices in the world market and this is not
only influenced by the increase in demand by the oil industry and the like, but
also other industries need.

In 2015, the total of yielded plant area (TM) is 8,5 million hectares
which consists of smallholder area amounted to 3.4 million hectares, Government
Estates area amounted to,600,4 thousand hectares and private estates area
amounted to 4,5 million hectares and will continue to increase. Thus, it can be
projected that in 2020 the yielded plant area will reach 11,6 million hectares, that
consist of smallholder area amounted to 4,6 million hectares, Government estates
area amounted to 661 thousand hectares and private estates area amounted to 6,3
million hectares.

From the total area, then it is predicted that in 2020 the plantation will
produce 274.87 million tons of fresh fruit bunches (FFB) or CPO produced will
reach 65.35 million tons and the Palm Kernel will be 12.91 million tons or 6.54
million tons of palm kernel oil (PKO)

The increase in production of CPO and PKO clearly will strengthen

Indonesia's position in world trade of vegetable oil. With the amount of production
above, it can be projected that the potential of Indonesian CPO exports in 2020
will be amounted to 13,51 PKO million tons while exports the export will be 2.79
million tons. The number is for the export of raw CPO and PKO and not including
allocated for domestic needs

Broadly speaking, it can be concluded that Indonesia will be stronger and

has a major role in the global palm oil trade. It is implied from the estate
development business, both by local and foreign investors. It seems that there is
no concern for investors that the palm oil market will be a problem, even they

CIC Capricorn Indonesia Consult] [Bussines Opportunity on Palm Oil Industry and Its Derivatives In Indonesia 2016 2020] 138
 Chapter 9
Conclusion

state that in the future palm oil will be able to shift the position of other vegetable
oils.

From that, it can be concluded that Indonesia's position in CPO export

market in the world market will be stronger. Even the major business actors in
palm oil such as, Wilmar Salim Group, Sinar Group, WILMAR Group, STRA
Group, PTPN Group and other large companies group are optimistic that the
potential of Indonesias crude palm oil export market and its derivative in the
coming years will be greater. This can be seen from the production potential that
is likely to increase each year, the domestic demand that is quite stable and the
outlook for the export market that is still wide open. In the future, CPO is
expected to ne be able to shift vegetable oil markets.

The demand for vegetable oil is expected to increase along with the
increasing needs of vegetable oil processing derivative industries other than CPO
and PKO such as, Soy Oil, Olive Oil, Sunflower Oil, Canola Oil, Corn Oil, Copra,
Sesame Oil, Cotton seed oil, groundnut oil, Linseed oil and Rapeseed oil. In
2015, the total world vegetable oil production is 209.37 million tons. The world
CPO production in 2015 is 61.68 million tons or has contribution of 29.71% and
the PKO production is 3.36 million or has contribution of 3.36%. Thus, both CPO
and PKO have contributed by 32.80 percent of the total world production of
vegetable oil.

In 2020, with the growth rate of world vegetable oil consumption of 4.20%
per year, the growth rate of world CPO production of 5.17% per year and growth
rate of PKO production of 5.70 % per year, it is predicted that world CPO
production will reach 79.34 million tons and PKO production will reach 9.29
percent and world vegetable oil production will reach 257.34 million tons. The
details of the production and projection of world CPO and PKO in 2016-2020 can
be seen in the following table.

Business opportunities are structured in order to meet the needs of

stakeholders and holders of piracy in the company to see how much business
opportunity Palm oil plantation industry, from upstream to downstream, complete in
the study book "OPPORTUNITIES OF PALM OIL INDUSTRY AND DERIVATIVE
PRODUCTS IN INDONESIA IN 2016 - 2020 "

CIC Capricorn Indonesia Consult] [Bussines Opportunity on Palm Oil Industry and Its Derivatives In Indonesia 2016 2020] 139
 Chapter 9
Conclusion

This study book is not publicly sold to bookstores, but is sold exclusively
to parties who want to get accurate information about the business opportunities of
Poultry Ranch in Indonesia, available in Indonesian edition for US $ 600.00 and
in english US $ 640, 00 More can contact Marketing Department Mr. Roni
Kusuma Hendra HP. 081280114545, or at 021-210486241 or Eddy Purwanto HP
081213962606.

CIC Capricorn Indonesia Consult] [Bussines Opportunity on Palm Oil Industry and Its Derivatives In Indonesia 2016 2020] 140
 List Of Contents

LIST OF CONTENTS

Chapter Pages

1. INTRODUCTION .................................................................................................... 1
1.1. Background .......................................................................................................... 1
1.2. The Scope Of Study .............................................................................................. 5
1.3. Methodologi......................................................................................................... 6

2. DESCRIPTION OF OIL PALM TREES, ITS HISTORY AND DERIVATIVES PRODUCT ........ 7
2.1 Description of Palm Trees .................................................................................... 7
2.1.1. Oil Palm Trees ......................................................................................... 7
2.1.2. Plant age .................................................................................................. 7
2.1.3. Plant material .......................................................................................... 8
2.1.4. Root .......................................................................................................... 9
2.1.5. Trunk ........................................................................................................ 10
2.1.6. Palm leaves (palm fronds) ....................................................................... 10
2.1.7. Flower ...................................................................................................... 11
2.1.8. Fruit .......................................................................................................... 11
2.1.9. Growing Environment ............................................................................. 11
2.1.10 Productivity .............................................................................................. 12
2.2. History Of Oil Palm Trees In Indonesia ................................................................ 13
2.3 Oil Palm Trees and Its Derivative Product .......................................................... 14
2.3.1. CPO derivative products ......................................................................... 16
2.3.2. Palm Kernel Oil Derivative Products i ...................................................... 16
2.3.3. Palm oil derivative products, Oleochemical ............................................ 16
2.3.4. CPO waste product .................................................................................. 16

3. BUSINESSES ACTORS OF OIL PALM PLANTATIONS IN INDONESIA ........................... 18

3.1 Small Holder ......................................................................................................... 20
3.1.1. The Area of Smallholder Oil Palm Plantation .......................................... 20
3.1.2. The Spread of Smallholder ....................................................................... 21
3.1.3. Palm Oil Production from Smallholder Plantation .................................. 25
3.1.4. Smallholder Productivity.......................................................................... 27
3.2. Goverment Estate ................................................................................................ 28
3.2.1. The area of Government Estates ............................................................. 31
3.2.2. The Spread of Government Estates ......................................................... 32
3.2.3. Palm Oil Production from Government Estates ...................................... 35
3.2.4. Government Estates Profile ..................................................................... 38

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3.3. Private Estate . ..................................................................................................... 48

3.3.1. Private Estates Area ................................................................................. 49
3.3.2. The Spread of Private Estates .................................................................. 49
3.3.3. Palm Oil Production from Private Estates ............................................... 53
3.3.4. Private Estates Palm Oil Production By Region ....................................... 54
3.3.5. Profile of 10 Large Private Companies in Indonesia ................................ 56

4. THE DEVELOPMENT OF INDONESIA'S PALM OIL EXPORTS ...................................... 80

4.1. Indonesias Palm Oil Export Potensial ................................................................. 80
4.1.1. Indonesia's CPO Export Potential ............................................................ 81
4.1.2. Indonesia's CPO Export Potential ............................................................ 83
4.2. The Development Of Indonesia CPO Exports ...................................................... 83
4.2.1. The Development of CPO Export from year to year ................................ 83
4.2.2. The Development of world price of CPO ................................................. 85
4.3. CPO Exports Based On Destination Countries ..................................................... 87
4.4. The Development Of PKO Export (Palm Kernel Oil) ........................................... 97
4.4.1. The Development of PKO Export from year to year ................................ 98
4.4.2. The Development of world price of PKO ............................................... 100
4.5 PKO Exports Based On Destination Countries ..................................................... 102

5. THE DEVELOPMENT OF INDONESIA'S PALM OIL IMPORT ....................................... 107

5.1. The Development of Crude Palm Oil (CPO) Import ............................................. 107
5.1.1. Crude Oil Palm (CPO) Import ................................................................... 107
5.1.2. CPO Import Based on Country of Origin. ................................................. 107
5.2. The Development Of Indonesias PKO Import ..................................................... 108
5.2.1. Palm Kernel Oil (PKO) Imports ................................................................. 108
5.2.2. Palm Kernel Oil Import Based on Country of Origin ................................ 109

6. DOMESTIC NEEDS FOR PALM OIL .......................................................................... 110

6.1. Domestic Consumption of Palm Oil ..................................................................... 110
6.1.1. The Development of CPO Consumption .................................................. 110
6.1.2. The Development of PKO Consumption .................................................. 111
6.2. Palm Oil Consumption By Food Industry ............................................................. 112
6.2.1. Cooking Oil Industry ................................................................................. 112
6.2.2. Margarine industry .................................................................................. 114
6.3. Palm Oil Consumption By Non-Food Industrial Sector ........................................ 115
6.3.1. Oleochemical ........................................................................................... 115
6.3.2. Soap & Detergent Industry ...................................................................... 117
6.3.3. Biodiesel industry..................................................................................... 117

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7. PALM OIL PROSPECT IN THE WORLD MARKET ......................................................... 120

7.1. Potential Production Of Crude Palm Oil (CPO) ................................................ 120
7.2. Potential Production Of Palm Kernel Oil ............................................................. 123
7.3. World Vegetables Oil Trade ................................................................................ 125
7.4. World Vegetables Oil Consumption..................................................................... 126
7.4.1. World Palm Oil Consumption (CPO) ........................................................ 126
7.4.2. World Vegetable Oil Consumption .......................................................... 127

8. PRODUCTION POTENTIAL AND PROSPECTS OF CPO-BASED INDUSTRY

AND IT DERIVATIVES ............................................................................................. 131
8.1. The Growth Prospect Of Planting Area................................................................ 131
8.2. Potential And Projection Of Indonesia Palm Oil Production ............................... 132
8.3. Projection Of Production And Consumption Of Indonesian Palm Oil ................. 134
8.3.1. Projection of Indonesia CPO Consumption ............................................. 134
8.3.2. Projection of Indonesia PKO Consumption.............................................. 135
8.4. Prospects Of CPO-Based Dwonstream Industries ............................................... 136

9. CONCLUSION ........................................................................................................ 138

CIC (Capricorn Indonesia Consult] iii

 List Of Tables

LIST OF TABLES

Table Pages

1.1. The Development of Palm Oil Area .......................................................................... 1

2.1. Classification Based on the Plant Age ....................................................................... 8

2.2. Characteristics of the type of oil palm fruits ............................................................. 8
2.3. Fruit Yield Percentage ............................................................................................... 9
2.4. The Height Growth Of Trunk On Normal Oil Palm Trees ......................................... 10
2.5. he Development of Number and Weight of Fruit Bunches ..................................... 11
2.6. Oil Palm Environment ................................................................................................ 12
2.7. Marihat Oil Palm Seeds Productivity to The Land Classes (Tonage/Year) ................ 12
2.8. FFB production Per Class of Different Types of Soil and Seed (Tonage/Years) ....... 17

3.1. The Development Of Oil Palm Plantation in Indonesia From 1968 to 2015.............. 18
3.2. Smallholder Plantation Area .................................................................................... 20
3.3. Smallholder Plantation Area by Province ................................................................. 21
3.4. Smallholder Yielded Area By Province ..................................................................... 22
3.5. Smallholder Immature Plant Area in 2013 2015 ................................................... 24
3.6. FFB Production of the Smallholder Plantation in 2011 -2015 ................................... 25
3.7. CPO and PKO Production From the Smallholder in 2000 2015 ............................. 26
3.8. Smallholders FFB Production in 2011 2015 ........................................................... 27
3.9. The Area of The Member of State-owned Holding Company (SOE 2015) ............... 30
3.10. Government Estate Area from 2000 to 2015 ........................................................... 31
3.11. Government Estates Planted Area by Province in 2011 2015 ............................... 32
3.12. Government Estate Yielded Area by Province in 2011 2015 .................................. 33
3.13. Government Estates Immature Plant Area in 2013 - 2015 ........................................ 34
3.14. CPO and Kernel Production From Goverment Estates in 2000 - 2015 ...................... 36
3.15. FFB production of the Government Estates in 2011 2015...................................... 37
3.16. State Enterprise Engaged in Palm Oil Industry ......................................................... 38
3.17. Processing Capacity of Palm Oil Mill PTP Nusantara I .............................................. 39
3.18. Processing Capacity of Palm Oil Mill PTP Nusantara II ............................................. 39
3.19. Processing Capacity of Palm Oil Mill PTP Nusantara III ............................................. 40
3.20. Processing Capacity of Palm Oil Mill PTP Nusantara IV ............................................. 41
3.21. Processing Capacity of Palm Oil Mill PTP Nusantara V .............................................. 42
3.22. Processing Capacity of Palm Oil Mill PTP Nusantara VI ............................................. 44
3.23. Processing Capacity of Palm Oil Mill PTP Nusantara VII ............................................ 45
3.24. Processing Capacity of Palm Oil Mill PTP Nusantara XII ............................................ 47
3.25. Development of oil palm planted area in Indonesia owned by SH GE and PE ......... 48
3.26. Private Estates Area in 2000 2015 ......................................................................... 49

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3.27. Planted Area of Private Estates 2011 2015 ............................................................. 50

3.28. Private Estates Yielded Area by Province in 2011 2015 ......................................... 51
3.29. Private Estates Immature Plant Area by Province in 2013 2015 ........................... 52
3.30. CPO dan PKO production from Private Estates in 2000 2015 ................................ 54
3.31. CPO Production from Private Estates by Province in 2011 2015 .......................... 55
3.32. Subsidiaries under Astra Agro Lestari ....................................................................... 57
3.33. Summary of the Production Activity in Astra Agro Lestari Group ........................... 58
3.34. Subsidiaries under Minamas Grup ............................................................................ 59
3.35. Summary of the Production Activity in Minamas Group ......................................... 60
3.36. Salim Grup Subsidiaries ............................................................................................. 61
3.37. Summary of the Production Activity in Salim Group ............................................... 62
3.38. Sampurna Agro subsidiaries ...................................................................................... 64
3.39. Summary of the Production Activity in Sampurna Agro .......................................... 65
3.40. SMART Subsidiaries ................................................................................................... 66
3.41. Summary of the Production Activity in SMART ....................................................... 67
3.42. DSN Group Subsidiaries ............................................................................................. 69
3.43. Summary of the Production Activity in DSN Grup .................................................... 70
3.44. Eagle High Plantation Group Subsidiaries .................................................................. 71
3.45. Summary of the Production Activity in Eagle High Plantation Grup ......................... 72
3.46. PT Bakrie Sumatera Plantation Group Subsidiaries ................................................... 74
3.47. Summary of the Production Activity in Bakrie Sumatera Plantation......................... 74
3.48. PT ANJ Grup Subsidiaries .......................................................................................... 75
3.49. Summary of the Production Activity in ANJ Group .................................................... 76
3.50. Wilmar International Subsidiaries.............................................................................. 77

4.1. CPO and Palm Kernel oil production Indonesia to Malaysia ..................................... 80
4.2. The development of Indonesias CPO Export ............................................................ 83
4.3. The development of Indonesia Other CPOs Export .................................................. 84
4.4. The Development of World CPO price ..................................................................... 86
4.5. CPO Exports Recapitulation by HS 2013 2015 ....................................................... 87
4.6. Export of CPO by the Destination Countries ............................................................. 88
4.7. Export of other CPO by the Destination Countries ................................................... 89
4.8. Production of Palm Kernel Oil in Indonesia and Malaysia ....................................... 98
4.9. The development of Indonesias PKO Export ........................................................... 99
4.10. Export of other PKO in 2000 2015 ......................................................................... 99
4.11. The development of Palm Kernel Oil World Price (US$) .......................................... 101
4.12. Recapitulation of PKO export based on HS 2013 2015 .......................................... 102
4.13. Export of Indonesias Crude oil of Palm Kernel (PKO) in 2013 2015 ..................... 103
4.14. Other PKO Export by the Destination Countries 2013 -2015 ................................... 104

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 List Of Tables

5.1. Crude Oil Palm (CPO) Import, 2000 2015 ............................................................... 107
5.2. Import of CPO by Country of Origin in 2013 2015 ................................................. 108
5.3. Indonesias PKO Import in 2000 2015 .................................................................... 108
5.4. Import of PKO by Country of Origin in 2013 2015 ................................................. 109

6.1. The development of domestic consumption of CPO, 2000-2015 ............................. 110

6.2. The development of domestic consumption of PKO, 2000- 2015 ............................ 111
6.3. CPO consumption for RBD olein ............................................................................... 113
6.4. TOP 10 GROUP the Major Business Actors in Cooking Oil Industry, Indonesia ....... 114
6.5. Margarine Production 2000 2015 .......................................................................... 115
6.6. CPO-based oleochemical production ........................................................................ 116
6.7. Palm Oil Consumption by Soaps/ Detergents Industry 2000 2015 ........................ 117
6.8. Indonesia biodiesel production 2010 2015............................................................. 118

7.1. Contributions of World Crude Palm Oil (CPO) Production 2005 2015 .................. 120
7.2. Production and consumption of the world CPO in 2005 2015 .............................. 121
7.3. The world and local CPO price in 1996 2015 ......................................................... 122
7.4. Contributions of World Palm Kernel Oil (PKO) Production 2004 2015 .................. 123
7.5. World PKO price per ton FOB in 1996 2015 ........................................................... 124
7.6. The development of world vegetable oil production, 2005 2015 .......................... 125
7.7. Contribution of the top 5 world vegetable production ............................................ 126
7.8. CPO World production and Consumption 2005 2015 ........................................... 127
7.9. The Price of Fresh Fruit Bunches at the Farm Level In Some Provinces (IDR/Kg)
2013 2015 ................................................................................................................ 128
7.10. CPO Prices in Some Province 2013 2015 ................................................................ 129
7.11. Palm Kernel Prices in Some Province 2013 2015 .................................................... 130

8.1. Projection of Oil Palm Plantations Additional Area in Indonesia by Ownership

2016 2020 ............................................................................................................... 132
8.2. The Potential and Projection of Indonesian Palm Oil Production, in 2016 2020 ... 133
8.3. Projection of Indonesia CPO Consumption in 2016 2020 ...................................... 135
8.4. Projection of Indonesia PKO Consumption in 2016 2020 ...................................... 136
8.5. Projection of Consumption CPO-based industry in 2016 2020 ............................. 137

9.1. The potential production and the prospect of Indonesias CPO Export, in 2016
2020 ........................................................................................................................... 139
9.2. Production and projection of World CPO and PKO in 2016 -2020 ............................ 140

CIC (Capricorn Indonesia Consult] vi

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CIC (Capricorn Indonesia Consult] vii

 CIC
Consulting Group

The Member of CIC Consulting Group Are

Comparised of several companies consulting a division each
Corresponding to their respective concentration of activities
The divison and main member of CICs bussines group
At present are the following

PT. CAPRICORN INDONESIA CONSULT Inc.

Market and Feasibility Studies, Bussines Periodical Reports,
And Company Investigation

PT. CONSUMER & RESEARCH INDONESIA

Marketing Research , Field Services & Data Collection,
Data Mining, Data Processing, Data Analysis ,
Quantitatives Research, Qualitative Research

PT. CORINTHIAN INFOPHARMA CORPORA

Market & Feasibility Studies on Pharmaceuticals
Medical Supplies, Hospitals, Medical Health Equipment, Food

Jalan Paus N0 89 Jakarta 13220 Indonesia

Phone : (021) 3101081 (Hunting), 3906274, 31905219
Fax (021) 3101505
Email : marketing@cic.co.id