JOURNAL MONITOR EDITION 14 : PALM OIL INDUSTRY: INDONESIA’S ECONOMIC-COVID LOCOMOTIVE DURING THE PANDEMIC AND NEW NORMAL
Journal Pages Number
Journal Document Type
Oil palm plantations as the spearhead of the palm oil industry, have proven to be an inclusive economic locomotive. The development of oil palm plantations results in a multiplier effect or creates greater benefits both in the form of output, income, added value and the creation of employment opportunities, not only in oil palm plantations but also in the national economy as a whole. Rifin’s research results (2011) revealed that an increase in palm oil production in oil palm plantations will produce a multiplier effect (output, income, labor and value added) in ten rural sectors outside of oil palm plantations (rural non-farm economy).
Other evidence can also be demonstrated that the existence of oil palm plantations in remote areas will produce an impact and encourage the birth of new sectors so that it transforms remote and backward areas into new economic centers as an agropolitan (new cities of agriculture). According to the Kementerian Transmigrasi dan Tenaga Kerja (2014), by 2013 at least 50 rural and disadvantaged regions were developed into new growth areas whose basis is CPO production. This statement is also confirmed by the World Growth (2011) study, which says that oil palm plantations in Indonesia are an important part of rural development.
The existence of the palm oil industry as the locomotive of the Indonesian economy during the Covid-19 pandemic was also maintained. This is because the palm oil industry naturally has high immunity such as being located in remote areas, implement natural physical distancing and producing products that are needed during the pandemic so that industrial operations from the upstream to downstream sectors continue to operating. So no layoffs in oil palm plantation, palm oil production remains stable and relatively good export performance.
Cumulative exports value of palm oil and its derivatives have contributed to foreign exchange exports in January-May 2020 reached USD 7 billion. The value export of palm oil product able contributed to Indonesia’s trade balance surplus in the first quarter of 2020.
Looking ahead in the New Normal era, it is estimated that an increase in demand for palm oil is used as raw material for downstream products such as biosurfactant products and sources of vitamins and healthy food. The palm oil industry has also prepared itself to remain productive in meeting the demands of the downstream industry while still implementing the health protocol. Oil palm plantation companies have also begin implementing the Oil Palm 4.0 technology package in plantation operations and PKS to improve efficiency, productivity while minimizing interaction between employees as a form of adaptation to Covid-19.
Thus, the large role of the palm oil industry as an economic locomotive in the Covid-19 pandemic and economic recovery in the New Normal era is expected to be able to turn the wheels of the rural and regional economy through the resulting multiplier effect, so able to save the national economic amid the potential of global economic recession due to outbreaks Covid-19.