Bali, 2 Desember 2009 - On behalf of the Government of the Republic of Indonesia, Mr. Hatta Rajasa, The Coordinating Ministry for Economic Affairs has opened the 5th Indonesian Palm Oil Conference in Nusa Dua. In his speech, He has realized that future development of palm oil industries need strong partnership and cooperation among stakeholders; government, business players; big and small, and society, including NGO’s. It is therefore he hope that  the conference will provide productive and conducive atmosphere  to discuss problems we face at present and to come up with solutions so that the existence of our palm oil industry will be stronger, better, and more competitive supported by solidarity and solidity of the whole stakeholders.

There are two big issues discussed in this conference. First is the issue of the challenges and opportunities of the sustainability of palm oil develeopment. This issue is very important to be discussed presently as our future industries would depend on how we—as industries—respond the current challenges and opportunities with respect to the sustainability issue. This is very important issue, especially, as we prepare the United Nation Conference on Climate Change (UNCCC) in Copenhagen on December 7-18, 2009. Second is the issue of palm oil prices in 2010. We all know that palm oil prices experienced fluctuation in 2009 due to global financial crisis and El-Nino factors. Thus, it will be interesting to analysis and forecast palm oil price behavior in 2010. These are very important and relevant issues.

Indonesia is bestowed by very rich natural resources, suitable agro climatic, located in the equator, many rivers and plenty of forests with its biodiversity. Only few countries are blessed with these unique conditions. Therefore, we have to be able to utilize as well as preserve these rich resources in a way that benefit our people and nation for current and future generations. In this context  Mr. Hatta believe that the first principle that must be applied in managing our resources is an adoption of sustainability principle. An adoption of this principle will guarantee that our resources will benefit not only current generation, but also future generations to come. In addition, this principle also enables us to utilize the resources in an efficient and effective ways as such we can accommodate the economic, social and environment interests at the same time.

The adoption of this principle does not mean that we can’t exploit our rich resources for the economic and social benefit of our society. In fact, the exploitation of our resources using technology and management is necessary to realize that our rich resources can be source of nation’s welfare. He consider this to be very important to state in this opportunity so all of us have similar perception in understanding the way we manage of resources. Therefore, for Indonesia sustainability is not an option, but it is a must. And, we adopt this, not because of the pressure and complaint of others. Rather, it is in our own best interest that we adopt and implement this principle.

The leadership of Indonesia facing on climate change, as proofing on International Climate Change Conference or Conference of Parties 13 (COP 13), in Bali in the year 2007. In that COP, the significant results of the meeting was Bali Action Plan. Later on, Bali Action Plan as one of the starting point agreement for Copenhagen meeting, next December in this year.

In the last G-20 summit in Pittsburgh, the United States, the President of Indonesia, Susilo Bambang Yudhoyono was announced that Indonesia has target of reducing carbon emission by as much as 26 percents from their level in 2005 by 2020. The 26 percent decrease in the carbon emission level will come from mixed energy and renewable energy including geothermal development, reforestation, avoiding forest fire and peat lands use management. Afterward, Indonesia hopes that initiative could be support in international mitigation on climate change and to drive finding a good deal in Copenhagen climate change meeting, December 2009.

This is especially true for palm oil industry. Most of oil palm plantation developed in the ex-logging areas, empty land, and/or converted from other commodities such as rubber, coffee, or cacao plantations. Only small portion of oil palm plantations are on the legally converted forest areas and pet land. So, we have to ensure that current and future development of palm oil is carried out in a sustainable way. We understand the environmental consequences of the continue growth of palm oil industry raised by the environmental groups here and abroad. Therefore, The government of Indonesia would like to ensure all stakehoders in this industry  that our law and regulations has taken into account various aspects of environmental issues such as biodiversity, wildlife conservations, high conservation values, and changes in land use. In other words we try to balance economic, social as well as environment considerations in developing this industry. Not only in cultivation practices, but also in processing and other aspects of the industry

In this regard the government of Indonesia welcome the establishment of a Roundtable Sustainability on Palm Oil (RSPO), a voluntary multi-stakeholders forum to promote the use of sustainable palm oil in every supply chain of the industry. This initiative fits with our commitment to develop sustainable palm oil industry. However, We would like to remind all stakeholders that the implementation of principle and criteria of RSPO has to be carried out in a gradual way and considering the readiness of all parties, especially small-holder farmers. Thus, the adoption of principle and criteria of RSPO do not create unnecessary disruption to the development of palm oil industry. RSPO is not a static formula rather it is a dynamic process. It is a journey to sustainable palm oil. What we need is the strong commitment of all every stakeholders to carry out the RSPO’s agreements.

The government of Indonesia also would like to share with all stakeholders the important role of palm oil industry in our economy. Earlier we mentioned about how Indonesia is blessed by rich natural resources. These God’s gifts enable us to produce various agricultural estate commodities including palm oil. History showed that palm oil production started long time ago at the era of colonization. After experiencing long and sometimes difficult journey, we see that now Indonesia becomes the largest producer of crude palm oil (CPO) producing of about 20 million tons and exporting of around 16 million tons of CPO. This great achievement takes place mainly due to an endless effort and commitment of all stakeholders; government, business players, and civil society. Combination of conducive business and investment climates, commitment of the business players and small-holder farmers, supports from central and regional governments and bright prospect of palm in the world market contribute to these achievements.

With these achievements, palm oil industry plays more important roles, at least, in four areas of our economic development. First, it contributes significantly to the creation of millions employment opportunities and the alleviation of poverty, especially in rural areas. Second, palm oil industry is also one of the engines of .regional development. Many areas developed mainly due to the existence and expansion of the industry. Third, palm oil industry has become major non-oil export earnings. In 2008, for example, the export earning from palm oil valued at around US $ 12.4 billions dollars, which is the largest contributor of export earnings excluding oil exports. Fourth, it provides healthy, low-cost staple product in national diet, such as cooking oil and processed food ingredient. And, fifth, it is a very competitive raw material product for biofuel, as a diversification energy sources become major energy program all over the world.

Based on these facts and future prospect of palm oil industry both from supply and demand sides, We have strong conviction that this industry will continue to grow at higher speed. Therefore, Mr. Hatta Rajasa would like to ensure that the government will do everything  to support this development.

However, we should not satisfy with these achievements. There are still areas of the industry that we should develop. As we may know that at the early stage of development, plantations and CPO mills played larger roles in the development of industry. In the future, attention should focus more on the development of down-stream industries so that we can obtain more added values created from the industry.

At this opportunity, Mr. Hatta Rajasa would like to convey to all stakeholders that government has a plan to develop palm oil based cluster industries in several special economic zones. At these locations, various palm oil and supporting industries will be developed, and the government will provide basic infrastructures such as, port, roads, and other supporting infrastructures. Government will also—if necessary—provide various incentive schemes for the industry. We hope we can create more value added, more efficient, more competitive domestic palm oil industries. This is a part of our efforts to develop more advanced downstream palm oil industries. The government of Indonesia invite all of you to participate in this program.

Finally, We would like to touch the issue of palm oil price, it seems that palm oil price in the 2010 will hopefully improve from the previous year considering more favorable condition both from supply and demand sides. World economic recovery, continue growth of demand from China and India, increasing demand for bio-fuel, and world oil prices increases are factors that likely contribute to palm oil price increase next year. We realize, of course that this is more hope than forecast as palm oil producer country who want to see high and stable prices.

As producer and exporter, Indonesian government are also hoping for stable and rewarding international prices of CPO and all palm oil base products, without loosing its competitiveness. But we need also to consider the interests of our domestic cooking oil consumers, which some of them are still to be low income household. Indonesia Government already implement a targeted support program for low income household, and an export duty policy as an automatic mechanism to reduce the risk of sudden fluctuation in international prices and its impact to domestic market.