Hoax 2 : The benefits generated by oil palm plantations are exclusively enjoyed by those directly involved in the oil palm plantations, i.e., plantation owners, employees and laborers
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Is the export of Indonesian Palm Oil is not important for the national economy?
In economic development, the impact of investment on a particular sector depends on the relation between investment and economic activity in the region. It has been mentioned earlier that growth of palm oil production has a strong correlation to and multiplier effect on other sectors.
Amzul’s 2011 study shows that increasing CPO production in CPO production centers in rural areas is also linked to and has a wide impact on rural sectors outside the oil palm plantations (non-farm economy). The 10 aforementioned sectors are as presented in table below.
If the CPO production increases (i.e. due to consumption, downstream investment and exports) the majority of the economic benefits it creates, about 60 percent, occurs in the areas of oil palm plantations and about 40 percent of those benefits occur in rural sectors outside of oil palm plantations such as with financial institutions, trades, restaurants, hotels, transportation, infrastructure and other sectors.
Table :Rural sectors that develop as a result of oil palm plantations
|3||Trade, restaurants and hotels|
|4||Basic chemicals and fertilizers|
|5||Oil, gas and mining|
Source: Table I-O Indonesia; Maul (2011)
This means the economic benefits created by the growth of oil palm plantations are not only enjoyed by the people and working communities on oil palm plantations, but also (40 percent) by communities working outside the oil palm plantations in rural areas.
The people working in oil palm plantations are also consumers of food and non-food products produced by urban and rural communities. Based on public expenditure data (BPS, 2016), the value of transactions between the people on the oil palm plantations and the urban communities reached Rap 336 trillion per year. Meanwhile, the transactions with rural communities amounted to Rp 92 trillion per year (figure 1). This means the total transactions between the people on the oil palm plantations and in the communities outside the oil palm estates nationally reach Rp 428 trillion per year.
In other words, the growth of oil palm plantations in rural areas increases the capacity of the rural economy to generate output, income and employment opportunities on oil palm plantations and in other rural non-farms sectors. The multiplier impact of oil palm plantation development is also enjoyed by the urban sector, such as by financial institutions, restaurants and hotels, food processing and electric equipment and manufacturing sectors. Developing oil palm plantations does not only build rural areas but is also part of urban development.
Figure : The value of transactions between people on oil palm plantations and the rural and urban economies
It is very clear that the benefits of oil palm plantations are not only enjoyed by the communities directly involved in oil palm plantations but also communities that are not directly involved, both in rural and urban areas (inclusive growth).