Palm oil revenue-sharing scheme: Infrastructure improvement awaited

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Bisnis Indonesia - DBH sawit: Perbaikan infrastruktur dinanti

3 August 2023

By: Arif Gunawan

Pekanbaru - Farmers in Riau Province are asking the regional government to prioritise using palm oil revenue-sharing funds to improve production support infrastructure.

Riau Province Association of Nucleus-Plasma Oil Palm Smallholders (Aspek-PIR) Chairperson Sutoyo said his association hopes that palm oil revenue-sharing funds from the central government can be used by the regional government to improve palm oil production facilities and infrastructure.

The funds acquired from palm oil export levy and duty are expected to increase palm oil production through adequate supporting infrastructure so that the plantation sector will be more optimal. He is asking that the funds to not be allocated for irrelevant matters, such as the replanting programme.

Meanwhile, palm oil replanting or other programmes has received budget allocation from the Oil Palm Plantation Fund Management Agency (BPDPKS).

“So, we want palm oil revenue-sharing funds to be focused on improving palm oil supporting infrastructure, such as plantation roads to the palm oil mills. So, the production quality of farmers can be maintained, and the yield can also increase,” he said on Wednesday (2/8).

He admits that the regional government must pay more attention to the condition of infrastructure at oil palm plantations in their region. One of the cases is the district road in Lubuk Batu Jaya District in Indragiri Hulu Regency that is currently in poor condition but has not been repaired as the budget is limited.

“The farmers here have made an agreement to allocate Rp66 per kilogram from our production to maintain village roads and plantation roads to the mills. This is our effort so that the oil palm products can be delivered properly,” he said.

Aspek-PIR also hopes that palm oil revenue-sharing funds can be used to support forest fires prevention efforts around oil palm plantations and fire-prone areas. It can be realised by making retention basins that are funded by palm oil revenue-sharing funds.

“With support from the funds, oil palm farmers in Riau should be able to face economic challenges and increase palm oil production sustainably.”

On a separate occasion, Riau Indonesian Oil Palm Farmers Association (Apkasindo) appreciates the government for the issuance of Presidential Regulation Number 38/2023 on palm oil revenue-sharing funds. The policy has been anticipated by oil palm farmers in Riau.

Riau Apkasindo Secretary Djono Albar Burhan also hopes that palm oil revenue-sharing funds can be used to improve production support infrastructure for oil palm farmers in the area.

“One of the things we expect is supporting infrastructure, such as roads, especially for farmers in remote areas and hinterlands who are still struggling to distribute their production, so the quality of the oil palm they produce is declining,” he stated.

With palm oil revenue-sharing funds, Apkasindo is asking the regional government to prioritise improving main roads in the regencies and access roads to palm oil production areas. Adequate road condition will help farmers carry their yield more efficiently without spending more to repair their vehicles.

“Even though the regional government is still waiting for the technical instruction on the distribution of palm oil revenue-sharing funds, Riau Apkasindo is still ready to support government programmes that benefit and support oil palm farmers in Riau,” he stated.

President Joko Widodo signed Presidential Regulation Number 38/2023 on 24 July 2023. The presidential regulation governs the ceiling of palm oil revenue-sharing funds that is set at a minimum of 4% of the state revenue, and it will be distributed to related regional governments with a proportion of 20% for provinces, 60% for producing regencies/cities, and 20% for other regencies/cities that share borders with the producing regencies/cities.

The presidential regulation sets palm oil revenue-sharing funds to be used to finance the construction and the maintenance of road infrastructure and other activities set by ministers.

Meanwhile, Finance Minister Sri Mulyani Indrawati previously revealed that palm oil revenue-sharing funds would be transferred to regions in the second half of 2023. The central government is allocating a budget of Rp3.4 trillion for the fiscal incentive.