Pekanbaru, Riau, March 22 (Antara) - Riau representative of Bank Indonesia said palm oil and derivatives contribute 39.31 percent to the economy of the province.
Riau, therefore, needs special policy from the government to facilitate development of the palm oil industry, a Riau representative of the central bank Irwan Mulawarman said in a discussion on "Would Riau survive without palm oil?" here on Tuesday.
"When the oil and gas industry was on the doldrums, palm oil industry could still sustain the economy of the province, which dominates its non oil/gas sector.
Riau is also a major producer of oil and gas.
Irawan said palm oil is a bigger contributor to the regional Gross Domestic Product (GDP) of Riau compared to the mining (oil and gas) sector which contributed 22.65 percent to its GDP in 2016.
In addition the contribution of the mining sector is on the decline lately.
Based on a survey by the Central Bank, Riau had 2.42 million hectares of oil palm plantations in 2015 or 25 percent of the total in the country.
The survey also showed that 167 of 219 companies operating in food industry in Riau use palm oil and provide jobs for 43,395 workers or 70.60 percent of industrial workers.
Vegetable oils and fats accounted for 61.47 percent of Riau s export earning and crude palm oil (CPO) made up 91.2 percent of the vegetable oils and fats.
CPO is exported to China, India, other ASEAN countries and the European Union.
Around 46.09 percent of Riau working people are in the agricultural, plantation and forestry sector.
Irwan said Riau needs to develop downstream palm oil industry and reduce exports of CPO. Most of Riau s palm oil production is exported in CPO. Indonesia has produced only 20 CPO-based manufactured products.
Indonesia, the largest palm oil producer in the world is far lagging behind Malaysia, the second largest palm oil producer in palm oil-based industry. Malaysia already turned out 120 types of palm oil-based commodities.
Researcher and a professor from the Riau University Almasdi Syahza said palm oil has big multiplier effect in Riau. Almost all sectors in Raiu gain from the development of palm oil commodities, the professor said.
A survey showed that from 1995 to 2015, the index of rural community welfare continued to rise. The farmers income reached US$4,630-US$5,500 per capita in 2015.
"Will Riau survives without palm oil? The answer is no . Palm oil industry has contributed to acceleration of development and reduce poverty in rural areas Riau," the professor said.
Meanwhile, an academician from the Bogor Institute of Agriculture (IPB) DR. Ricky Avenzora drew attention to black campaigns abroad mainly in Europe launched by foreign non governmental organizations (NGOs) against Indonesian palm oil industry.
The country s palm oil industry needs protection from the discriminatory policy adopted by the EU against Indonesian palm oil products, Dr Ricky said.
Oil palm plantations have been accused of being the cause of deforestation and forest fires in the country.
Palm Oil Contributes 39,3 Percent To Riau s Economy
