Sustainable investment strategies in the palm oil industry in Indonesia
Vol 7, Issue 3, 2023
VIEWS - 3949 (Abstract)
Abstract
The purpose of this study is to look at the negative environmental impacts and social problems, which require a government response to maintain the sustainability of the palm oil industry. This research uses Online Research Methods (ORMs) to collect data and information through the internet and other digital technologies. The collected data was then coded using Nvivo 12 Plus. The purpose of this study is to fill the research void left by previous researchers by analyzing investment strategies and services in supporting the sustainability of the palm oil industry in Riau Province. This study shows that to support the potential of the palm oil industry to remain optimal, the central and local governments coordinate to provide investment services and pay attention to the sustainability issues of the palm oil industry. Some important aspects to consider are strengthening regulations, an integrated plantation licensing system, improving access to markets, RSPO certification, realization of foreign investment, downstream industry, replanting programme, plantation revitalisation programme, and sustainable plantation partnerships. However, there are still some crucial challenges, particularly land conflicts, climate change, environmental issues, limited technology and innovation, and export market dependence. These challenges may hamper future investment opportunities.
Keywords
Full Text:
PDFReferences
- Abdillah A, Widianingsih I, Buhari RA, Rusliadi R (2023). Collaborative communication models in non-cash food assistance (Bantuan Pangan Non-Tunai, BPNT) program: Toward community resilience. In: Rajakumar G, Du K, Rocha A (editors). Intelligent Communication Technologies and Virtual Mobile Networks, Proceedings of 5th International Conference on Intelligent Communication Technologies and Virtual Mobile Networks (ICICV 2023); 16–17 February 2023; Tirunelveli, India. Springer Nature Singapore. pp. 75–91. doi: 10.1007/978-981-99-1767-9_6
- Abdul-Hamid AQ, Ali MH, Tseng ML, et al. (2020). Impeding challenges on industry 4.0 in circular economy: Palm oil industry in Malaysia. Computers & Operations Research 123: 105052. doi: 10.1016/j.cor.2020.105052
- Afriyanti D, Kroeze C, Saad A (2016). Indonesia palm oil production without deforestation and peat conversion by 2050. Science of the Total Environment 557–558: 562–570. doi: 10.1016/j.scitotenv.2016.03.032
- Ali AAM, Othman MR, Shirai Y, Hassan MA (2015). Sustainable and integrated palm oil biorefinery concept with value-addition of biomass and zero emission system. Journal of Cleaner Production 91: 96–99. doi: 10.1016/j.jclepro.2014.12.030
- ANTARA (2020). Riau launches RIC as a potential investment map (Indonesian). Available online: https://www.antaranews.com/berita/1280537/riau-luncurkan-ric-sebagai-peta-potensi-investasi (accessed on 29 August 2023).
- Aulia AF, Sandhu H, Millington AC (2020). Quantifying the economic value of ecosystem services in oil palm dominated landscapes in Riau Province in Sumatra, Indonesia. Land 9(6): 194. doi: 10.3390/land9060194
- Ayompe LM, Schaafsma M, Egoh BN (2021). Towards sustainable palm oil production: The positive and negative impacts on ecosystem services and human wellbeing. Journal of Cleaner Production 278: 123914. doi: 10.1016/j.jclepro.2020.123914
- Azhar B, Nobilly F, Lechner AM, et al. (2021). Mitigating the risks of indirect land use change (ILUC) related deforestation from industrial palm oil expansion by sharing land access with displaced crop and cattle farmers. Land Use Policy 107: 105498. doi: 10.1016/j.landusepol.2021.105498
- Aziz MMA, Kassim KA, ElSergany M, et al. (2020). Recent advances on palm oil mill effluent (POME) pretreatment and anaerobic reactor for sustainable biogas production. Renewable and Sustainable Energy Reviews 119: 109603. doi: 10.1016/j.rser.2019.109603
- Badan Pengkajian dan Penerapan Teknologi (2023). Available online: https://www.bppt.go.id/ (accessed on 29 August 2023).
- Badan Pusat Statistik (2021). Riau Province Oil Palm Statistics 2021 (Indonesian). Badan Pusat Statistik.
- Badan Pusat Statistik Provinsi Riau (2023). Available online: https://riau.bps.go.id/ (accessed on 29 August 2023).
- Benjaminsen TA, Alinon K, Buhaug H, Buseth JT (2012). Does climate change drive land-use conflicts in the Sahel? Journal of Peace Research 49(1): 97–111. doi: 1177/0022343311427343
- Blach-Overgaard A, Svenning JC, Dransfield J, et al. (2010). Determinants of palm species distributions across Africa: The relative roles of climate, non-climatic environmental factors, and spatial constraints. Ecography 33(2): 380–391. doi: 10.1111/j.1600-0587.2010.06273.x
- BPPT (2019). PLT biogas POME, processing liquid palm waste into electricity (Indonesian). Available online: https://www.bppt.go.id/berita-bppt/plt-biogas-pome-olah-limbah-cair-sawit-menjadi-listrik (accessed on 28 August 2023).
- Chazdon RL, Guariguata MR (2016). Natural regeneration as a tool for large-scale forest restoration in the tropics: Prospects and challenges. Biotropica 48(6): 716–30. doi: 10.1111/btp.12381
- Dafermos Y, Nikolaidi M, Galanis G (2018). Climate change, financial stability and monetary policy. Ecological Economics 152: 219–234. doi: 10.1016/j.ecolecon.2018.05.011
- Davy E, Hansen UE, Nygaard I (2021). Dual embeddedness? Innovation capabilities, multinational subsidiaries, and solar power development in south Africa. Energy Research & Social Science 78: 102145. doi: 10.1016/j.erss.2021.102145
- De Vos RE, Suwarno A, Slingerland M, et al. (2021). Independent oil palm smallholder management practices and yields: Can RSPO certification make a difference? Environmental Research Letters 16(6): 065015. doi: 10.1088/1748-9326/ac018d
- Degli Innocenti E, Oosterveer P (2020). Opportunities and bottlenecks for upstream learning within RSPO certified palm oil value chains: A comparative analysis between Indonesia and Thailand. Journal of Rural Studies 78: 426–437. doi: 10.1016/j.jrurstud.2020.07.004
- Dharmawan AH, Mardiyaningsih DI, Komarudin H, et al. (2020). Dynamics of rural economy: A socio-economic understanding of oil palm expansion and landscape changes in east Kalimantan, Indonesia. Land 9(7): 213. doi: 10.3390/land9070213
- Dinas Perkebunan Provinsi Riau (2023a). Available online: https://dis-bun.riau.go.id/ (accessed on 29 August 2023).
- Dinas Perkebunan Provinsi Riau (2023b). Synchronization of fixed figures plantation statistics data in 2022 (Indonesian). Available online: https://disbun.riau.go.id/artikel/sinkronisasi-data-statistik-perkebunan-angka-tetap-tahun-2022 (accessed on 28 August 2023).
- Direktorat Jenderal Perkebunan (2023). Available online: https://ditjenbun.pertanian.go.id (accessed on 28 August 2023).
- Direktorat Jenderal Pengembangan Ekspor Nasional (2023). Available online: https://djpen.kemendag.go.id/ (accessed on 28 August 2023).
- DPMPTSP Provinsi Riau (2023). Available online: https://dpmptsp.riau.go.id/ (accessed on 28 August 2023).
- Effendi U, Astuti R, Melati DC (2017). Chocolate business development strategy using quantitative strategic planning matrix (QSPM) and multi attribute utility theory (MAUT) in Kampung Coklat (Indonesian). Industria: Journal of Technology and Management of Agroindustry 6(1): 31–40. doi: 10.21776/ub.industria.2017.006.01.5
- Eid ME, Diener EE (2006). Handbook of Multimethod Measurement in Psychology. American Psychological Association. doi: 10.1037/11383-000
- Farobie O, Hartulistiyoso E (2022). Palm oil biodiesel as a renewable energy resource in Indonesia: Current status and challenges. BioEnergy Research 15(1): 93–111. doi: 10.1007/s12155-021-10344-7
- Froese R, Schilling J (2019). The nexus of climate change, land use, and conflicts. Current Climate Change Reports 5: 24–35. doi: 10.1007/s40641-019-00122-1
- Hansen UE, Nygaard I (2014). Sustainable energy transitions in emerging economies: The formation of a palm oil biomass waste-to-energy niche in Malaysia 1990–2011. Energy Policy 66: 666–676. doi: 10.1016/j.enpol.2013.11.028
- Jelsma I, Woittiez LS, Ollivier J, Dharmawan AH (2019). Do wealthy farmers implement better agricultural practices? An assessment of implementation of good agricultural practices among different types of independent oil palm smallholders in Riau, Indonesia. Agricultural Systems 170: 63–76. doi: 10.1016/j.agsy.2018.11.004
- Johari A, Nyakuma BB, Nor SHM, et al. (2015). The challenges and prospects of palm oil based biodiesel in Malaysia. Energy 81: 255–61. doi: 10.1016/j.energy.2014.12.037
- Johnson A (2022). The roundtable on sustainable palm oil (RSPO) and transnational hybrid governance in Ecuador’s palm oil industry. World Development 149: 105710. doi: 10.1016/j.worlddev.2021.105710
- Kementerian ESDM RI (2023). Available online: https://www.esdm.go.id/ (accessed on 28 August 2023).
- Kementerian Koordinator Bidang Perekonomian Republik Indonesia (2023). Available online: https://ekon.go.id/ (accessed on 28 August 2023).
- Kementerian Perindustrian Republik Indonesia (2021a). Challenges and Prospects for Downstreaming of National Oil Palm: Analysis of Industrial Development (Indonesian). Kementerian Perindustrian Republik Indonesia.
- Kementerian Perindustrian Republik Indonesia (2021b). Palm oil partnership must be strengthened (Indonesian). Available online: https://kemenperin.go.id/artikel/22266/Kemitraan-Sawit-Harus-Diperkuat (accessed on 28 August 2023).
- Kementerian Perindustrian Republik Indonesia (2021c). National palm product industry competitive in European market (Indonesian). Available online: https://kemenperin.go.id/artikel/22348/Industri-Produk-Sawit-Nasional-Berdaya-Saing-di-Pasar-Eropa (accessed on 28 August 2023).
- Kementerian Perindustrian Republik Indonesia (2023). Available online: https://kemenperin.go.id/ (accessed on 28 August 2023).
- Lee ZS, Chin SY, Lim JW, et al. (2019). Treatment technologies of palm oil mill effluent (POME) and olive mill wastewater (OMW): A brief review. Environmental Technology & Innovation 15: 100377. doi: 10.1016/j.eti.2019.100377
- Lestari S, Winarno B, Premono BT, et al. (2021). Opportunities and challenges for land use-based peatland restoration in Kayu Labu Village, South Sumatra, Indonesia. In: IOP Conference Series: Earth and Environmental Science, Proceedings of the 6th International Conference of Indonesia Forestry Researchers—Stream 4 Engaging Social Economic of Environment and Forestry, Better Social Welfare; 8 September 2021; Bogor, Indonesia. IOP Publishing Ltd. Volume 917. doi: 10.1088/17551315/917/1/012021
- Lim CH, Lim S, How BS, et al. (2021). A review of industry 4.0 revolution potential in a sustainable and renewable palm oil industry: HAZOP approach. Renewable and Sustainable Energy Reviews 135: 110223. doi: 10.1016/j.rser.2020.110223
- Low SS, Bong KX, Mubashir M, et al. (2021). Microalgae cultivation in palm oil mill effluent (POME) treatment and biofuel production. Sustainability 13(6): 3247. doi: 10.3390/su13063247
- Macdonald K (2020). Private sustainability standards as tools for empowering southern pro-regulatory coalitions? Collaboration, conflict and the pursuit of sustainable palm oil. Ecological Economics 167: 106439. doi: 10.1016/j.ecolecon.2019.106439
- Majid NA, Zaimah R, Sum SM, Awang AH (2021). Sustainable palm oil certification scheme frameworks and impacts: A systematic literature review. Sustainability 13(6): 3263. doi: 10.3390/su13063263
- Malik I, Abdillah A, Rusnaedy Z, Khaerah N (2021). Coastal women’s resilience strategy against climate change vulnerability in Makassar, Indonesia. In: E3S Web of Conferences, Proceedings of International Conference on Environmental and Energy Sustainabilities (ICEES 2021); 24–25 May 2021; Seoul, Republic of Korea. EDP Sciences. Volume 277. doi: 10.1051/e3sconf/202127701003
- Maluin FN, Hussein MZ, Idris AS (2020). An overview of the oil palm industry: Challenges and some emerging opportunities for nanotechnology development. Agronomy 10(3): 356. doi: 10.3390/agronomy10030356
- Manik Y, Leahy J, Halog A (2013). Social life cycle assessment of palm oil biodiesel: A case study in Jambi Province of Indonesia. The International Journal of Life Cycle Assessment 18(7): 1386–1392. doi: 10.1007/s11367-013-0581-5
- Martin S, Rieple A, Chang J, et al. (2015). Small farmers and sustainability: Institutional barriers to investment and innovation in the Malaysian palm oil industry in Sabah. Journal of Rural Studies 40: 46–58. doi: 10.1016/j.jrurstud.2015.06.00
- McIntyre-Mills JJ, Makaulule M, Lethole P, et al. (2023). Ecocentric living: A way forward towards zero carbon: A conversation about indigenous law and leadership based on custodianship and praxis. Systemic Practice and Action Research 36(2): 275–319. doi: 10.1007/s11213-022-09604-0
- Media Center Riau (2016). Director general of EBTKE inaugurates Asian agri. PLTBg (Indonesian). Available online: https://mediacenter.riau.go.id/read/18409/dirjen-ebtke-resmikan-pltbg-asian-agri.html (accessed on 29 August 2023).
- Nesadurai HES (2019). Transnational private governance as a developmental driver in southeast Asia: The case of sustainable palm oil standards in Indonesia and Malaysia. The Journal of Development Studies 55(9): 1892–1908. doi: 10.1080/00220388.2018.1536262
- Nupueng S, Oosterveer P, Mol APJ (2022). Governing sustainability in the Thai palm oil-supply chain: The role of private actors. Sustainability: Science, Practice and Policy 18(1): 37–54. doi: 10.1080/15487733.2021.2021688
- Pacheco P, Schoneveld G, Dermawan A, et al. (2020). Governing sustainable palm oil supply: Disconnects, complementarities, and antagonisms between state regulations and private standards. Regulation & Governance 14(3): 568–598. doi: 10.1111/rego.12220
- PanganNews (2022). Contribution of Indonesian palm oil overcoming the global food crisis (Indonesian). PanganNews, 3 November.
- Parvand S, Rasiah R (2021). Adoption of advanced technologies in palm oil milling firms in Malaysia: The role of technology attributes, and environmental and organizational factors. Sustainability 14(1): 260. doi: 10.3390/su14010260
- Paterson RRM (2020). Future scenarios for oil palm mortality and infection by Phytophthora palmivora in Colombia, Ecuador and Brazil, extrapolated to Malaysia and Indonesia. Phytoparasitica 48(4): 513–523. doi: 10.1007/s12600-020-00815-6
- Pemerintah Provinsi Riau (2018). Riau Province investment general plan for 2019–2025 (Indonesian). Available online: https://dpmptsp.riau.go.id/media/file/12721643457Naskah_Akademik_RUPM_2018_OK.pdf (accessed on 28 August 2023).
- Pemerintah Provinsi Riau (2023). Riau investment canal. Available online: https://ric.dpmptsp.riau.go.id/ (accessed on 21 June 2023).
- Portal Pemerintah Provinsi Riau (2023). Available online: https://www.riau.go.id/ (accessed on 28 August 2023).
- Prianto AL, Abdillah A (2023). Vulnerable countries, resilient communities: Climate change governance in the coastal communities in Indonesia. In: Climate Change, Community Response and Resilience. Elsevier. pp. 135–152. doi: 10.1016/B978-0-443-18707-0.00007-2
- Prianto AL, Nurmandi A, Qodir Z, Jubba H (2021). Climate change and religion: From ethics to sustainability action. In: E3S Web of Conferences, Proceedings of International Conference on Environmental and Energy Sustainabilities (ICEES 2021); 24–25 May 2021; Seoul, Republic of Korea. EDP Sciences. Volume 277. doi: 10.1051/e3sconf/202127706011
- Purnomo H, Okarda B, Dermawan A, et al. (2020). Reconciling oil palm economic development and environmental conservation in Indonesia: A value chain dynamic approach. Forest Policy and Economics 111: 102089. doi: 10.1016/j.forpol.2020.10208
- Putri EIK, Dharmawan AH, Hospes O, et al. (2022). The oil palm governance: Challenges of sustainability policy in Indonesia. Sustainability 14(3): 1820. doi: 10.3390/su14031820
- Radez J, Reardon T, Creswell C, et al. (2021). Why do children and adolescents (not) seek and access professional help for their mental health problems? A systematic review of quantitative and qualitative studies. European Child & Adolescent Psychiatry 30: 183–211. doi: 10.1007/s00787-019-01469-4
- Reips UD (2002). Standards for internet-based experimenting. Experimental Psychology 49(4): 243. doi: 10.1026/1618-3169.49.4.243
- Reips UD (2006). Web-based methods. In: Eid ME, Diener EE (editors). Handbook of Multimethod Measurement in Psychology. American Psychological Association. pp. 73–85.
- Reips UD, Bosnjak M (2001). Dimensions of Internet Science. Pabst Science Publishers. pp. 159–178.
- Retnaningsih UO, Asriwandari H, Ningsih RB, et al. (2022). The persistence of patriarchy in the palm oil sector: Evidence from the Riau Province of Indonesia. Cogent Social Sciences 8(1). doi: 10.1080/23311886.2022.2112825
- Rizaty MA (2022). Riau has the largest area of oil palm plantations in 2021 (Indonesian). Available online: https://databoks.katadata.co.id/datapublish/2022/01/31/riau-miliki-luas-perkebunan-kelapa-sawit-terluas-pada-2021 (accessed on 29 August 2023).
- Rodthong W, Kuwornu JKM, Datta A, et al. (2020). Factors influencing the intensity of adoption of the roundtable on sustainable palm oil practices by smallholder farmers in Thailand. Environmental Management 66(3): 377–394. doi: 10.1007/s00267-020-01323-3
- Siperibun (2019). Siperibun usage instructions. Available online: https://sip.ditjenbun.pertanian.go.id/petunjuk-penggunaan (accessed on 28 August 2023).
- Sodri A, Septriana FE (2022). Biogas power generation from palm oil mill effluent (POME): Techno-economic and environmental impact evaluation. Energies 15(19): 7265. doi: 10.3390/en15197265
- Syahza A, Asmit B (2019). Regional economic empowerment through oil palm economic institutional development. Management of Environmental Quality: An International Journal 30(6): 1256–1278. doi: 10.1108/MEQ-02-2018-0036/full/html
- Syahza A, Irianti M, Nasrul B (2020). What’s wrong with palm oil, why is it accused of damaging the environment? In: Journal of Physics: Conference Series, Proceedings of Universitas Riau International Conference on Science and Environment 2020 (URICSE-2020); 11–13 September 2020; Pekanbaru, Indonesia. IOP Publishing. doi: 10.1088/1742-6596/1655/1/012134
- Tan Y, Lim JS (2019). Feasibility of palm oil mill effluent elimination towards sustainable Malaysian palm oil industry. Renewable and Sustainable Energy Reviews 111: 507–522. doi: 10.1016/j.rser.2019.05.043
- Tey YS, Brindal M, Darham S, et al. (2020). Early mover advantage in roundtable on sustainable palm oil certification: A panel evidence of plantation companies. Journal of Cleaner Production 252: 119775. doi: 10.1016/j.jclepro.2019.119775
- Tey YS, Brindal M, Djama M, et al. (2021). A review of the financial costs and benefits of the roundtable on sustainable palm oil certification: Implications for future research. Sustainable Production and Consumption 26: 824–837. doi: 10.1016/j.spc.2020.12.040
- van Hille I, de Bakker FGA, Groenewegen P, et al. (2021). Strategizing nature in cross-sector partnerships: Can plantation revitalization enable living wages? Organization & Environment 34(2): 175–197. doi: 10.1177/1086026619886848
- Varkkey H, Tyson A, Choiruzzad SAB (2018). Palm oil intensification and expansion in Indonesia and Malaysia: Environmental and socio-political factors influencing policy. Forest Policy and Economics 92: 148–159. doi: 10.1016/j.forpol.2018.05.002
- Wassmann B, Siegrist M, Hartmann C (2023). Palm oil and the roundtable of sustainable palm oil (RSPO) label: Are Swiss consumers aware and concerned? Food Quality and Preference 103: 104686. doi: 10.1016/j.foodqual.2022.104686
- Widianingsih I, Abdillah A, Herawati E, et al. (2023). Sport tourism, regional development, and urban resilience: A focus on regional economic development in Lake Toba District, North Sumatra, Indonesia. Sustainability 15(7): 5960. doi: 10.3390/su15075960
- Widianingsih I, McIntyre JJ, Rakasiwi US, et al. (2023). Indigenous Sundanese leadership: Eco-systemic lessons on zero emissions: A conversation with indigenous leaders in Ciptagelar, West Java. Systemic Practice and Action Research 38(2): 321–353. doi: 10.1007/s11213-022-09606-y
- Woodham CR, Aryawan AAK, Luke SH, et al. (2019). Effects of replanting and retention of mature oil palm riparian buffers on ecosystem functioning in oil palm plantations. Frontiers in Forests and Global Change 2: 29. doi: 10.3389/ffgc.2019.00029
- Yek PNY, Cheng YW, Liew RK, et al. (2021). Progress in the torrefaction technology for upgrading oil palm wastes to energy-dense biochar: A review. Renewable and Sustainable Energy Reviews 151: 111645. doi: 10.1016/j.rser.2021.111645
- Yuslaini N, Suwaryo U, Deliarnoor NA, Sri Kartini D (2023). Palm oil industry and investment development in Dumai City, Indonesia: A focus on local economy development and sustainability. Cogent Social Sciences 9(1): 2235780. doi: 10.1080/23311886.2023.2235780
DOI: https://doi.org/10.24294/jipd.v7i3.2288
Refbacks
- There are currently no refbacks.
Copyright (c) 2023 Nina Yuslaini, R. Widya Setiabudi Sumadinata2, Muhammad Fedryansyah, Abdillah Abdillah, Andi Luhur Prianto, Doris Febriyanti

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
This site is licensed under a Creative Commons Attribution 4.0 International License.