Replanting Program for Indonesian

Sustainable Palm Oil Industry

Eddy Abdurrachman | President Director

Oil Palm Plantation Fund Management Agency

October 2021
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Outlook 2022: continued economic growth in 2022
The Government's policy of continuing the National Economic Recovery Program in the National Budget, Vaccination
Program, and restrictions on public's movement in mid 2021 provide more conducive conditions at the end of the year to
encourage economic activity, increase consumption & investment, so that the economy will grow in 2022

Indonesia Economic Outlook 2021-2022 Projection of Economic Growth 2020-2022

Lembaga 2021f 2022f

5.8
World Bank (Jun 21) 4,4 5,0 5.2 5
OECD (Sep 21) 3,7 4,9 4.5
5.2
ADB (Sept 21) 3,5 4,8
2.07 3.7
IMF (Okt 21) 3,2 5,9

2.07
The Main Factors Driving Indonesia's Economy 2022
Management of the Covid-19 Pandemic 2018 2019 2020 2021 2022
• Covid-19 Case Controlling Efforts
• Vaccination Program 2021
Expansive Fiscal Policy Support the National Economic Program 2020 2021f 2022f
• Demand-side support through strengthening social assistance Economic growth 2.07 3.7 to 4.5 5.2 to 5.8
• Supply-side support focuses on tax incentives, as well as credit assistance & (% yoy)
guarantees for SMEs and cooperatives
Acceleration on Reformation Inflation (% yoy) 1.68 3.0 4.0
• Productivity, competitiveness & investment climate reforms
• Job Creation Law, Budget Reform, and the Investment Management Agency (LPI) Sources: IMF, World Bank, Bloomberg, OECD, ADB, Coordinating Ministry for
Economic Affairs, Ministry of Finance, Central Bank of Indonesia

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 Palm Oil Industry: Strong contribution to the economy

GROSS DOMESTIC PRODUCT up until Q3 2021 GDP Growth in Agriculture, Forestry and Plantation
8 7.07 Sector 2019-Q3 2021
6 5.18 5.07 5.05 5.02 4.97
6 5.28
In Percentage (%)

3.51
4 4.25

In Percentage (%)
2.97 5
2 4 3.38
3.07
2.59
0 3 2.2 2.16
1.79
-2 -0.74 2 1.31
-2.19
1 0.43
-4 -3.49 0.01
-6 -5.32
0
Q IV Q I Q II Q III Q IV Q I Q II Q III Q IV Q I Q II Q III QI Q II Q III Q IV QI Q II Q III Q IV QI Q II Q III
2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021

Employment in Palm Oil Industry • Indonesia's GDP has bounced back & remained positive to 3,51% in Q3.
• With positive GDP growth in the Plantation Sector, the Palm Oil Industry
can maintain a stable employment.
• The export value in 2020 is USD22.97 billion, or 14% of total national
exports, grew 18.43% compare the previous year.

4.2 Million 2.4 Million • The estimated contribution of tax revenue from the palm oil industry is
Direct Employment Smallholders Farmers IDR 14 – 20 trillion per year.
• Implementation of the Mandatory B30 program even during the pandemic
12 Million Employing impacted to more foreign exchange savings due to reduction of Fossil
Indirect Employment 4.6 Million Workers fuel import (gas oil)

Sources: BPDPKS internal analysis, BPS Statistics News Quarter 3 of 2021

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 Big Production, Sufficient for Global Demand
As the world’s biggest palm oil producer, Indonesia expects to produce more than 50 million ton of Palm Oil in
2025. This will give more supplies for food industry, oleochemical as well as biofuel for both domestic and export,
for global market.

Indonesian Palm Oil Production Projection Market Share of CPO Producers

2018 – 2025 (Million Tonnes) (in %)
58.77
2.14%
2%
Colombia
Kolombia
3,90% 1.75%
2%
4%
Thailand
Thailand Nigeria
Nigeria
8,13%
8%
Others
48.29
Others

47.12
42.88

2018 2019 2020 2025 59,66%

30%
24,41% 54%
Malaysia Indonesia
Indonesia
Malaysia
Source: BPDPKS
Source : USDA

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 Integration Strategy: Upstream and Downstream Industry
Improvement of Farmers' Welfare
# Replanting Program
For smallholders in an effort to increase their
productivity
# Upstream Research
Indonesian palm oil database Improvement , seed
quality and innovation of plantation technology
# Facilities and infrastructure
Production and transportation cost efficiency and
support for ISPO certification
# Training and Education Program
increasing productivity and environmentally
friendly oil palm plantations
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CPO Price Stabilization
# Biodiesel Program
Domestic Market Creation & overstock
control over palm oil
# Active Palm Oil Promotion
and Advocacy
Maintain and expand Domestic
and Overseas Market
# Market and Product Research
Stronger policies to palm oil industry,
price stability and derivative products
development with high added value
Strengthening Downstream Industry
# Research and Development of
Palm Oil Conversion Program to
Bio-Hydrocarbon Fuel
Research Support for catalyst
invention, Incentives for bio-
hydrocarbon fuel program
# Support for other Downstream
Programs
Research Support and Incentives for
the Oleochemical Industry
5
 Sawit Indonesia for SDGs
The use of oil palm supports the Sustainable Development Goals

Palm oil creates jobs, especially Oil palm plantations provide a place to
in rural areas live for a variety of biodiversity both flora
Actively supporting poverty and fauna
alleviation efforts

Emission reduction through Has an important role in economic

photosynthesis in very large plantations development, creating jobs and decent work
and supporting energy security using
renewable energy

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 Indonesia Palm Oil Sector Support
Smallholders Farmers To Have Decent Jobs

Most of smallholders' farmers are from mid-to-low income family. They control less than 4 Ha of land. They consist of
both local and transmigrant people with low level education. However, they can have decent work in Palm Oil
Plantation and has been in this job for over 10 years.
Profile of Oil Palm Smallholders Farmers in Seruyan and Kota Waringin Barat District, Central Kalimantan

Transmigrant
Local (From Other Region
in Indonesia)

Population 37% 63%

12.69 – 16.7 15.8 – 16.5

Productivity Level
Ton/Ha/Year Ton/Ha/Year

Land ownership Inherited land Certificate

Land size 2 - 4 Ha 1 - 2 Ha

Level of Education Elementary School Junior High School

Age 31 - 58 26 - 52

Year to start 2010 2008

Profile of Oil Palm Smallholders Farmers in Source: INOBU, 2018
Seruyan and Kota Waringin Barat District,
Central Kalimantan
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 Indonesia Palm Oil Sector Support
Poverty and Inequality Reduction
Since 2000, Indonesian Palm Oil Sector has helped 10 million people out of poverty
because of the factors related to palm oil plantation and at least 1.3 million people in rural area
lifted out of poverty line directly because of palm oil industry.

20

10
Average Poverty Level (%)

18
Million
16
People
14 Region with palm oil plantation Out of poverty
National
Region with no palm oil plantation Helped by Palm
12
Oil Industry
2001 2004 2007 2010

Regions with palm oil

plantations have more
significant reduction of
poverty level compared to
another region and national.

Source : Ryan B. Edwards, Center on Food Security and the Environment, Stanford University

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 Palm Oil Is Not the Cause of Global Deforestation
Oil palm plantations are developing to fill abandoned land due to forest
encroachment practices. Palm oil is actually helping in reforestation

Palm Oil Plantations 1973 1985

Mining sites

Forest

Pulp Wood Forestry

Comparison of CO2
absorption of oil palm
Abandoned Land
trees with natural forests

2000 2015

17 t/ha/y

6 t/ha/y

8,6 m 8 t/ha/y

Palm Oil Tree (25 t/ha/y) Natural Forest Tree (6 t/ha/y) Source : IPB, Peter Engbers/borneoforestcover
Source: Forestry and Forest Products Res. Inst. FFPRI
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 Indonesia Palm Oil Contributes to Climate Action
Part of Climate Action, Emission Reduction is Indonesia’s main priority based on
Paris Agreement. The emission reduction target is difficult to be achieved without direct contribution from
oil palm sector.
Oil Palm Sector Initiatives
Indonesia Emission Smallholders Replanting Program to increase
Implementation of Biodiesel Mandatory
Reduction Target by productivity and reduce illegal land clearing,
program, to increase the use of renewable
2030 implementation of ISPO, Moratorium primary forest
energy and reduce emission.
(in Percentage - %) & peatland

Forest Fire Prevention Management and increase

people’s participation for forest conservation

The use of POME (Palm Oil Mill Effluent) to

increase electrification ratio in rural area. POME
41 has potential of electrifying 1.4 million households
and capable of reducing 9.8 Million Ton C02

29

Unconditional With
International
Support

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 Indonesia Palm Oil Replanting Program

Program Target Program Impacts

Increased Productivity of Replanting Program has been
smallholders' plantation successfully proven to be
driving the smallholders’
income and welfare

Program Performance
IDR 6,17Trilion of Replanting
fund has been disbursed Program Potential
For more than 234k Ha There are around 2million Ha
Replanting Area and more than of potential plantation area for
102k smallholders’ replanting program

Program Collaboration Program Urgency

BPDPKS, in collaboration with To ensure sustainability
Central Government principles, program
(Ministries and Institutions), participants are required to
Municipal Government, obtain Indonesia Sustainable
Smallholders’ Association and Palm Oil (ISPO) certification at
Private Companies to the first harvest
implement this program

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 Smallholders Replanting Target Area 2021

ACEH
20.500 ha
SUMUT
20.500 ha KALTARA
500 ha
RIAU
SULTENG
26.500 ha
4.000 ha
KALTIM PAPUA
KALBAR BARAT
5.000 ha
SUMBAR 12.500 ha 1.500 ha
JAMBI
8.000 ha 18.000 ha
KALTENG
SULBAR
11.150 ha P
10.000 ha
SUMSEL
BENGKULU 22.350 ha BABEL PAPUA
6.500 ha 500 ha KALSEL 1.000 ha
3.500 ha SULTRA
LAMPUNG SULSEL 1.000 ha
3.000 ha 3.000 ha

BANTEN
1.000 ha

Potential Replating area > 50.000 ha

Potential Replating area 10.000 ha > area < 50.000 ha
Potential Replating area < 10.000 ha

Source : Directorate General of Plantation, Ministry of Agriculture

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 Replanting Program: Progress Report
(2016- 31th October 2021)
From 2016 to 30 September 2021 the realization of PSR fund distribution
area of 234,392 Ha with 102,209 Planters Chart Title
Luasan (Ha)
37.440

364

Luasan (Ha)
37.440
Luasan (Ha)
Aceh 37.440
29.536
Ha
Kaltara
655 Ha
364
Sumut
21.705
Ha Kaltim
Riau 7.042 Ha
28.272Ha
Kalbar 364
Sumbar 14.307 Ha
10.013 Ha Jambi Sulteng
16.460 Babel Kalteng 2.434 Ha
Ha Sulbar Papua
Sumsel 948 Ha 14.817 Ha
14.827 Ha
Bengkulu 41.096 Ha Kalsel Barat
10.794 Ha 3.529 Ha 2.045 Ha
Lampung Sulsel Sultra Papua
2.127 Ha 6.669 Ha 664 Ha
2.086 Ha
190,000 Banten 2,670 3,000
1.258 Ha
2,262 2,500

PSR FUND in Rp Trilion

140,000
2,000
AREA (HA)

88,326 90,491 94,033

90,000 63,906 1,500
1,022
34,594 34,067 34,067 1,000
40,000 13,125
Powered by Bing

12,609
© GeoNames, Microsoft, TomTom

254 254 2,938 500

-10,000 0
2016 2017 2018 2019 2020 s.d Oktober 2021
REKOMTEK LUAS LAHAN (HA) REALISASI LUAS LAHAN (HA) Dana PSR Yang Disalurkan

Source: PSR Online

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Challenges in Land Status of
Replanting Program

Problems with Forest Areas/HGU Land Certification Issues

Need support from the Ministry of Support from the Ministry of

Environment and Forestry in the ATR/BPN in completing the
acquisition of land located in forest certification of oil palm lands in
areas Replanting area.

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 Smallholders Replanting Funding Scheme

Replanting Fund
Proposal Requirements Verification Process Disbursement

Dinas
Perkebunan
Smallholders Integrated Team
Kabupaten/P
Cooperatives Ditjen Perkebunan Ditjen Perkebunan BPDPKS
rovinsi

1 2 3 4 5

Submission of Administration Verification by Technical Replanting Fund

PSR proposal and Field integrated team Recommendation Disbursement
Verification

Using the PSR Online App

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Replanting Partnership Scheme

Poktan/ Gapoktan/
Inti Companies BPDPKS KUR PSR – Bank
Cooperatives

Partnership MoU Initiation Stage Advanced Stage

(Application, Verification, CPCL) (P0) (P1 - P3)
Partnership Forms
a. Inti – Plasma
b. State Owned Enterprise/ Private Companies - Smallholders

BPDPKS

Application selection of Appointment Disbursement of Matching funds/bank Productive

for plasma funded Inti and of plasma funds of IDR30 credit for advanced plantation
replanting plasma recipient million/ha for early- plantation development purchased by the
stage plantation Inti company

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