1. The Growth of Palm Oil Plantation and Processing Industry Sector

The palm oil industry and its derivative products seem unaffected by the current pandemic. Even since the pandemic, when many sectors experienced a decline in performance, this sector actually showed positive performance from all aspects. Starting from the increase in consumption, production, exports to prices that continue to occur until mid-2021.

Based on data from the Indonesian Palm Oil Association (GAPKI), domestic palm oil consumption in 2020 was recorded at 17.349 million tons, up 3.6% compared to 2019. Consumption of food products contributed the most to domestic palm oil consumption. Meanwhile, domestic consumption in Q1/2021 was recorded at 4.72 million tons, up 3.8% compared to the same period last year of 4.55 million tons. The highest increase occurred in consumption of oleochemical products which amounted to 462,000 tons, up 62.54% compared to Q1/2020 which amounted to 284,000 tons. Then biodiesel consumption was stagnant or only increased by 0.42%, namely 1,968,000 tons in Q1/2021 compared to 1,960,000 tons in Q1/2020. Meanwhile, consumption for food products decreased by 0.55% from 2,308,000 in Q1/2020 to 2,295,000 tons in Q1/2021.

In terms of production, until March 2021 (Q1) CPO production also increased by 1.6% or by 11.17 million tons compared to the same period in 2020 of 10.99 million tons. This increase in production was also followed by an increase in the export volume of CPO and its derivative products by 10.57% or 8.47 million tons in Q1/2021 compared to Q1/2020 which was 7.66 million tons.

Meanwhile, the average price of palm oil in June 2021 based on the CIF Rotterdam index decreased after previously continuing to increase since the beginning of the year and peaked in May 2021. In June 2021, the average CPO price was USD 1,077.50 per ton or decreased by 15 ,34% compared to May 2021 of USD 1,272.81 per ton. Prices in June are also the lowest since February 2021.

One of the reasons for the weakening of CPO prices since June 2021 is India, as the world’s largest importer of palm oil, has experienced a spike in Covid-19 cases, which has forced the country to re-implement a strict lockdown. This resulted in a decline in consumption of CPO and its derivative products in that country, while CPO production from various countries was still high, resulting in oversupply which caused prices to fall. But along with the decline in infection cases, India is gradually easing its restrictions. So there is hope that demand will gradually improve.

2. Obstacles in the Palm Oil Plantations and Processing Industry Sector

Currently, the palm oil industry and its derivatives are a strategic sector in Indonesia because of their positive performance even in the midst of a pandemic. However, this sector is also not free from a number of challenges, including:

a. Land and legality issues.

Players in this sector are often faced with land problems, especially for the development of new plantations due to the incompleteness of national spatial problems and the Provincial Spatial Planning (RTRWP). In addition, there is legal uncertainty regarding the legal status of the land. This condition makes concession holders and investors choose a wait and see attitude which of course will have an impact on the level of land expansion.

b. Related policies.

The existence of a moratorium policy on primary forests and peatlands can make it difficult to solve land problems that have previously been faced with the RTRWP problem. The moratorium policy is counterproductive for the development of oil palm investment. This policy will collide with other regulations such as Law No. 41/1999 on Forestry where the government provides 35.2 million ha of degraded land but the status of the area is still questionable because it is a forest area.

c. High cost.

The high and progressive export duty for CPO as currently applies has proven to be insufficient to suppress the volume of CPO exports and has not been able to encourage the development of domestic downstream industries. On the other hand, the export duty system is believed to be unfair to producers of raw materials, both state and private plantations, as well as smallholders because they ‘do not enjoy’ the increase in margins that should be obtained from the current high price of CPO in the world.

d. Lack of infrastructure.

The development of palm oil plantations leading to Eastern Indonesia is not supported by adequate infrastructure such as ports. It is also hoped that the construction of industrial clusters will soon be realized for the development of the downstream palm oil industry.

e. Tax issues.

Palm oil business actors feel disadvantaged by the application of tax rules regarding VAT on FFB primary products. This is because the FFB VAT has been exempted so far so that the input tax on factors of production cannot be credited and becomes an additional burden. As a result, it creates double taxation for integrated companies (production-processing).

f. Environmental issues

The anti-palm oil campaign is still ongoing and there is a possibility that even stronger pressure will be exerted on the palm oil industry players. The theme of the anti-palm oil campaign is still related to the issue of climate change and environmental damage in general. This series of anti-palm oil campaigns will be more systematic, carried out not only by NGOs but by certain consumer groups and several countries in the European Union, through the imposition of new standards in the palm oil trade and the application of rules in the form of non-tariff barriers.

g. Labor issues and risk mitigation

Indonesia must carry out climate change mitigation programs with its own strength without involving foreign assistance. The involvement of foreign funds will only make Indonesia more dependent on other countries, while foreign aid funds will not necessarily have a direct impact on employment and poverty reduction.


3. The Growth of Several Financial Accounts from Public Companies (Tbk)

Based on data from the Indonesian Stock Exchange (IDX) it is known that there are 17 corporate entities that run their business in this sector. Then from the results of your analysis of the financial statements of these entities, the results of the percentage growth of several financial accounts from Public Companies (Tbk) (Q1/2020-Q1/2021) are as follows:

We can conclude that in Q1/2020 the increase in net sales/revenue in the palm oil sector grew quite high at 20.80% (Y-o-Y). This increase was also accompanied by an increase in the cost of goods sold (COGS) in this sector by 81.12% (Y-o-Y). On the other hand, net income was corrected quite deeply or grew negatively by 106.67% (Y-o-Y). Meanwhile, the total assets of players in this sector grew stagnant at 0.40% (Y-o-Y).

Meanwhile, the calculation of the portion of the account size based on net sales/revenue is as follows:

Based on the table above, it is known that the median amount of total assets owned by public companies (tbk) in Q1/2021 was 932.65% of net sales with varying amounts and a fairly high range between 143.94% to 12654.93%.

Meanwhile, the median amount of COGS owned by public companies (tbk) in Q1/2021 was -32.49% of their net sales with amounts varying between -80.76% to 103.34%.

In terms of net income, the median value is 6.33% of net sales. While the amount varies from -16.49% to 47.19%.