Policy Strategy to Stimulate Indonesia’s Palm Oil Downstream Industries

Yulia Setia Lestari; Muzzar Kresna; Nur Hadiati Endah; Nailatalmuna Nitrasatri Atmaja; Eristya Puspitadewi  Irwanto; Brian Pratistha

doi:10.46456/jisdep.v6i2.726

Yulia Setia Lestari National Research and Innovation Agency, Jakarta, Indonesia
Muzzar Kresna National Research and Innovation Agency, Jakarta, Indonesia
Nur Hadiati Endah National Research and Innovation Agency, Jakarta, Indonesia
Nailatalmuna Nitrasatri Atmaja National Research and Innovation Agency, Jakarta, Indonesia
Eristya Puspitadewi Irwanto National Research and Innovation Agency, Jakarta, Indonesia
Brian Pratistha National Development Planning Agency, Jakarta, Indonesia

https://doi.org/10.46456/jisdep.v6i2.726

Abstract

The Indonesian government has prioritized downstream industrial development to enhance the economic value of domestically produced palm oil. This initiative targets three strategic sectors: oleo-food, oleochemicals, and bioenergy. The advancement of these industries entails more than an expansion of upstream production; it requires a nuanced understanding of each sector’s absorption and production capacities. This study employs the Analytic Hierarchy Process (AHP) to assess investment characteristics and competitiveness within these downstream sectors. The findings identify six critical policy factors to stimulate investment: tax incentives, the establishment of special economic zones, improved plantation productivity, favorable pricing for fresh fruit bunches (FFB), enhanced access to agroindustrial financing, and the integration of upstream and downstream operations. These elements are essential for fostering a conducive investment climate and advancing the transformation of Indonesia’s palm oil sector to support broader national economic development goals.

Author Biographies

Yulia Setia Lestari, National Research and Innovation Agency, Jakarta, Indonesia

Yulia Setia Lestari, is a policy analyst at the deputy for development policy at the National Research and Innovation Agency (BRIN) of the Republic of Indonesia. She holds a bachelor’s degree in development economics from Airlangga University and a master’s degree in management from IPB University. She focus on studies related to trade and investment.

Muzzar Kresna, National Research and Innovation Agency, Jakarta, Indonesia

Muzzar Kresna, is a researcher at the Centre for Area Studies at the National Research and Innovation Agency (BRIN) of the Republic of Indonesia. He holds a bachelor’s degree in development economics from Airlangga University, Indonesia, and a master’s degree in African studies from Universiteit Leiden, The Netherlands. Muzzar’s research expertise predominantly lies in industrial development, structural transformation, and area studies, with a particular focus on African economies. His research includes "Crisis and Social Changes in Tanzania" (2016), "Crisis, Growth, and Changes in Kenya" (2017), and studies on "Growth and Development in Ethiopia" (2018) and Tanzania (2019). Most recently, he conducted a study titled "From Farmer to Dalali: Rethinking Structural Transformation Pathway in Tanzania" (2023), exploring the shift from agriculture to servicification-based economies.

Nur Hadiati Endah, National Research and Innovation Agency, Jakarta, Indonesia

Nur Hadiati Endah is currently a researcher at the BRIN. Her research interests are commerce and macro economy. She completed her Master from The University of Auckland. She has published papers in international and national refereed journals.

Nailatalmuna Nitrasatri Atmaja, National Research and Innovation Agency, Jakarta, Indonesia

Nailatalmuna Nitrasatri Atmaja M.Ec.Dev. is a junior researcher at the Directorate of Economic, Employment, and Regional Development Policy, National Research and Innovation Agency of Indonesia with speciality in policy and sustainable supply chain. She was graduated from Department of Politics and Governance, Gadjah Mada University in 2013. In 2017, she graduated her study as Master of Economic Development from Gadjah Mada University. Her previous publications discussed about the political economy, green economy, and sustainable trade. For further correspondence, Naila can be reached via email at nail005@brin.go.id / naila.atmaja@gmail.com

Eristya Puspitadewi Irwanto, National Research and Innovation Agency, Jakarta, Indonesia

Eristya Puspitadewi Irwanto, M.S.E. is a researcher at the Research Center for Industrial Economics, Services and Trade BRIN and previously worked as a state budget analyst at the Secretariat General of the House of Representatives of the Republic of Indonesia in 2017. Her master degree majoring in Economics, University of Indonesia in 2016. Research focuses on international trade and international economics.

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