This analysis focus on the relationship between China and Indonesia after the implementation of ACFTA with a literature survey and data analysis through the empirical methodology. Furthermore, the Krugman theory model reflects the palmoil trade between China and Indonesia, contributing factors in both countries and the bilateral trade increased for this sector through ACFTA. Several previous studies using gravity model for analyzing a trade, determining the effects of East Asian free trade agreements on the trade using a gravity model to measure the strength of the three major Eastern Asian free trade agreements (ASEAN, ACFTA, and ASEAN-South Korea). Reassessing ACFTA on ASEAN manufacturing exports to China, use two models to examine and compare the impacts of ACFTA on the exportation of P&C and internal manufactured goods from the ASEAN-5 to China (Yean & Yi, 2014). Every model is based on bilateral trade's basic gravity model. Using a panel of data 1995-2004 to analysis the influences and the potential of bilateral import trade flows in East Asia (Dan, 2008). Identification of the leading causes of trade flows used in explaining bilateral trade flows. The gravity model was used to analyze the impact on trade flows between ASEAN + 3 free trade agreement in the period 2000-2013 with panel information on GDP, GDP per capita, and distance between ASEAN member of trade and ASEAN world trade (Wang, Wei, & Liu, 2010). The econometric model approach is a successful model analysis of international trade because of the empirical and consistency of the economic theory. The certification model can be applied with an FTA by variables that indicate whether the trading countries are included in the FTA (Thu & Van Trung, 2015). The variables can be estimated whether the FTA has a significant effect on the trade or not. If the coefficient sign is positive and significant, it can be stated that the FTA has a positive impact on trade flows(Van Bergeijk & Brakman, 2010).
The Renewable Energy Directive (RED) of the European Union includes a commitment to substitute part of the Union’s transport fuel with biofuels as an environmentally friendly alternative to fossil fuels. For diesel engines, biofuels can be derived from vegetable oils such as palmoil, rapeseed and soybean (Demirbas, 2007; Tan et al., 2009). Similarly, environmental authorities in the USA have formulated standards for a minimum degree of net emission reduction for biofuel use (EPA, 2010). Currently, more than 80% of the world biodiesel production derives from rapeseed oil. However, palm-oil production costs are lower than that of other vegetable oils (Thoenes, 2006; Tan et al., 2009) and increased demand for palmoil as a source of biodiesel can be expected, if environmental regulations and import restrictions allow. Demand of palmoil has increased, as it is a source of fats and oil for food products (Tan et al., 2009) as well as biofuel feedstock to replace fossil fuel (Reijnders and Huijbregts, 2008; Tan et al., 2009). These multiple types of use have promoted expansion of oilpalm plantation not only in Indonesia but also in Malaysia (Barlow et al., 2003; Koh and Wilcove, 2008; Danielsen et al., 2009), and at more modest scale elsewhere in the humid tropics. Indonesia and Malaysia still represent 90% of global production and trade of palmoil (Thoenes, 2006). Environmental issues in expansion of oilpalm plantations include loss of biodiversity and the net emission of carbon dioxide per unit product, especially when peatlands are used and high carbon- stock forests are converted (Koh et al., 2008; Reijnders and Huijbregts, 2008). Carbon debts incurred at establishment of oilpalm plantations can take decades or centuries to repay, depending on subsequent productivity, or have infinite pay-back times on peat soils where recurrent CO 2 emissions exceed the possible emission saving from the fossil
Despite having several advantages, introducing biodiesel to Indonesia may also carry potential disadvantages. These imply that a further study should be conducted to calculate the maximum saving by introducing this fuel. Such a study should also consider the most effective way of introducing biodiesel fuel to the Indonesian market, given its demography, economic, social and geographical conditions. The study should also endeavour to avoid or minimize creating other problems such as deforestation and air pollution due to aggressive development of biodiesel from oilpalm. Furthermore, recognizing the importance of government’s role and the participation of other palmoil stakeholders to the success of biodiesel development, concrete partnership based on a mutual interests is crucial. The initiative to build mini-biodiesel plant has served as an example of cooperation among the biodiesel stakeholders for the further development of this fuel in Indonesia.
this negatively impacts 16 species in Sumatra alone (the Indonesian island that contains more than half of oilpalm plantations), including the endangered Sumatran tiger, elephants and rhinos. 11 The most well-known victim is the orangutan, which is a keystone species that plays a vital role for the health of the rest of the ecosystem. Over the past 20 years, over 90 percent of the orangutan’s habitat has been destroyed in Sumatra and Borneo. The United Nations (UN) considered this a “conservation emergency,” as an estimated 1,000-5,000 orangutans are killed each year due to the development of palmoil plantations. 12 The tropical rainforests of Indonesia are home to over 300,000 different species of animals and their habitats are not only being destroyed, but they are also being cut off and separated from the rest of the forests which increases their vulnerability to poaching and smuggling. 13
where the dependent variable Y for ith household includes annual expenditure for food, daily calorie consumption, and calorie from nutritious food. The dummy variable indicating whether farmers expand their oilpalm farm size during two decades (from 1990s until the survey period) is specified as where vector provides the conditional mean effect of . The socioeconomic factors in vector contain household head’s age, years of education, number of family members, total annual income, and some dummy variables. Since farmers are categorized as NES scheme and independently reside in different villages. Then is specified as dummy variable of village, either under the transmigration scheme or non-transmigration village. Furthermore, , and are the parameter vectors to be estimated, and is the random error term with zero mean and constant variance. The analysis on the effect of oilpalm expansion on food expenditure and calorie consumption might lead to heterogeneity among expansion and non-expansion farmers due to different motivation and socioeconomic background. The alternative solution for investigating the effect under heterogeneous effect is to apply quantile regression specification (2), which is introduced by Koenker and Bassett (1978) as the median regression generalization to other quantiles. The quantile regression allows estimating the effect in the condition that changes the conditional distribution of the dependent variable (Roger & Hallock, 2011). Previous studies have applied the quantile regression to model the heterogeneous effect from wheat price (D’Souza & Jolliffe, 2012), oilpalm adoption (Euler, 2015), and farming technology adoption (Sanglestwai et al., 2014). The conditional quantile regression of for any given value of xi can be expressed as
Despite the success of the palmoil industry, critics have challenged palmoil production and sought to ban palmoil imports (Suwarno, 2019). The Southeast Asian palmoil industry has attracted the attention of international, non-governmental organizations (NGOs). These environmental groups worry about the sustainability of the area’s production processes, which have adversely affected the ecological system (Klarin, 2018). In responding to such negative claims, the Ministry of Communication and Information, together with the PalmOil Plantation Fund Management Agency Indonesia and the Coordinating Ministry for Economic Affairs Indonesia, launched a political marketing campaign. It sought to provide palmoil updates using social media platforms and began in September, 2019 (Negara, 2019). The campaign used #SawitBaik on Twitter as a governmental effort to inform and educate the public about palmoil as well as to build online awareness and diplomatic goodwill with the world community. The hashtag was designed to influence others, a symbol for a movement that wanted individuals to become part of a much larger movement (Bruns et al., 2011). Twitter was chosen because this social media platform is often used for online advocacy efforts due to its instant information distribution (Burger, 2015).
Over the last few decades, Indonesian oilpalm industry has grown significantly becoming a very important agriculture-based industry, where the country is today the first world’s leading producer and exporter. Total factor productivity (TFP) is a framework that can be employed to analyze the source of economic growth. Using the data from the National Farmers Panel Data Survey for the year 2009 and 2012 in two observed districts respectively in Sanggau and Muaro Jambi district, the results of determinant factors analysis shows that Land, Pesticide, Fertilizer and Labor have significant contribution to total production of oilpalm in both districts. On the other hand, based on accounting approach, the result reveals that TFP index values of the districts of Sanggau and Muaro Jambi respectively were 1.56 and 1.03. This study have important implications on how to facilitate the adjustment of small farmers to more efficient oilpalm production.
solid fats and liquid oils in the production of commer- cial food, particularly fast food and the snack and baked-good industries. Artificial and synthetic trans- fats are created by the processed food industry from partially hydrogenating unsaturated plant fats. Recently, developed economies have recognised the health risks of trans-fats, and have begun to limiting their use. Countries such as Demark, Switzerland and some U.S counties have banned the use of trans-fats in restaurants and fast food chains. Other countries such as the United Kingdom, Canada and Brazil have imle- mented policies aimed at reducing the use of trans- fats, including the requirement for trans-fats to be listed on food labels. In substitute for trans-fats, the demand for palmoil has increased. In addition to being a source of healthy unsaturated fats, palmoil is odourless and tasteless and does not require hydro- genation to achieve a solid state. These characteristics make palmoil ideal for margarine, baked goods and packaged goods, making it a strong competitor with vegetable oils made from soybeans and rapeseed that require hydrogenation to achieve a solid state. In addi- tion, palmoil is tolerant to high heat making it useful in the fried food and fast food industries.
The economic importance of palmoil industry in Malaysia and Indonesia are very significant. Oilpalm is Indonesia’s second largest agricultural output after rice. With the cultivation sector being very labour intensive and with over 50% of its population situated in the rural area, the palmoil industry in Indonesia is a major contributor to rural employment. It is estimated that the oilpalm sector provides direct and indirect employment to some six million people in rural regions of Indonesia and is thus a significant contributor in the alleviation of rural poverty (World Growth 2011). In Malaysia, although manual labourers in oilpalm estates are almost exclusively comprised of foreign laborers, the palmoil industry is the fourth contributor to the national economy after oil and gas, tourism and manufacturing sectors. The Malaysian Government has targeted the palmoil industry to be a major contributor of growth in its Economic Transformation Program launched in 2010. 1 This sector
While a large number of studies modeled regions in Malaysia, the world’s second largest palmoil producer after Indonesia, only a few have discussed the case of Indonesia. Some studies that analyzed the Malaysian case are worth mentioning. Chiew et al. [ 16 ] carried out various scenarios to identify the optimal location of combined heat and power (CHP) plants for treating EFB, aiming at maximizing regional profit. The optimization model took into account biomass availability, transport distances, and the scale and location of CHP plants within the state of Selangor. Also, Foo [ 6 ] described the regional bioenergy supply chain for utilizing EFB, minimizing transportation costs to CHP plants for the case of Sabah state in Malaysia. Idris et al. [ 9 ] assessed the utilization of EFB, fronds, and trunks for co-firing, using spatial optimization to identify the technology cost. The regional bioenergy supply chain under carbon pricing and trading policies was discussed by Memari et al. [ 8 ] to evaluate the impact of using EFB in a CHP plant. Lam et al. [ 7 ] and Theo et al. [ 17 ] evaluated complex supply chain network designs, considering both the full biomass potential in a single plant and accounting for multiple palmoil mills in Malaysia. Lam et al. [ 7 ] proposed a strategy to integrate the solid biomass residues with industrial waste motor oil for fossil fuel substitution, while Theo et al. [ 17 ] focused on the utilization of POME and its distribution pathways.
Additionally, palmoil plays an important role in the economies of Indonesia and Malaysia, as both countries export the commodity for the purpose of earning foreign exchange. According to Abdullah and Wahid (2010), these two countries are the main contributors of palmoil as both together constituted about 85% of the world production of the commodity itself and 23% of the world oils and fats production. Based on the production of large plantations in Indonesia by crops type, palmoil was ranked first in 2015 at 20,615.9 thousand tons, followed by palm kernel oil, sugar cane and rubber (BPS, 2015). The rapid growth of this commodityhas elevated Indonesia's position on the world's palmoil market. The country displaced Malaysia in 2006 to become the largest producer of CPO worldwide and by 2015 the country’s share reached 53% of world CPO production while Malaysia was second with 33% market share (Sipayung, 2016). The increase in palmoil production is as a results of some factors, such as efficiency in production, availability of harvested land, low production costs, promising domestic and international markets and government policies which encourage industrial development for economic growth (Casson, 2000).
The rapid growth of palmoil in Southeast Asia, especially Indonesia, makes this commodity as a commodity that has an important role in the economic activity in this country. There are at least two issues closely related to this commodity: the competitiveness and sustainability issues. It has been widely discussed that palmoil is one of the few commodities that has high competitiveness in the international market and becomes one of the country's foreign exchange earners. According to the Directorate General of Estate Crops (2015), the export volume of palmoil in 2014 reached 24,372,011 tons with a value of 19 billion US GROODUV 2LO SDOP ODERU LQWHQVLYH DOVR SURYLGHV EHQH¿WV to employment. There are 2,052,050 farmers and 3,166,273 workers who depend on their livelihoods from palmoil. Plantation area increased almost doubled from 6.7 million ha in 2007 to 11.6 million ha in 2016 with total production reaching 6.7 million tons. Smallholder plantations contribute 33.6% of national palmoil production with plantation area reaching 4.7 million ha or equivalent to 40.8% of the total area of national palmoil plantation. Related to the issue of competitiveness, Nayantakaningtyas & Daryanto (2012) stated several threats that need to be seriously reviewed: (i) negative issues (black campaign) of palmoil; (ii) competition with other vegetable oil producing countries; (iii) weak coordination among stakeholders; (iv) political stability, security, and government policy. Improving government policy by taking into account the national and international issues is believed as the essential strategy to solve the problems.
Our results indicate that a combination of factors under the agronomy of oilpalm smallholdings and the enabling envi- ronment for smallholder oilpalm development best explain variations in both smallholder oilpalm yields and household incomes. Good practices in agronomy within oilpalm small- holdings are a result of smallholders’ own experience and knowledge in oilpalm agriculture and smallholders ’ enabling environment which defines the level of support smallholders receive in terms of access to training and agricultural inputs. From our model predictions, we highlight two specific vari- ables, harvesting rotation and type of smallholder manage- ment, which were shown to constrain smallholder oilpalm yields and incomes, respectively. Improving smallholder yields and income to increase productivity and benefit sharing within Indonesia’s oilpalm industry therefore require both intensive agricultural extensions to smallholders in Indonesia and state intervention policies to ensure smallholders have an enabling environment for oilpalm development. Based on the main findings of our study, we recommend (1) prioritizing agricultural extension on best management practices for inde- pendent smallholders and (2) improving access to oilpalm mills to lower marketing costs of fresh fruit bunch for inde- pendent smallholders. While agricultural extension and state intervention policies continue to be important for smallholder yields and income, the approach taken should be considered in light of Indonesia ’s past agricultural extension policies for smallholder tree crop development. Some lessons drawn from Indonesia’s experience with smallholder oilpalm and rubber projects in Sumatra and Kalimantan include the need for stron- ger institutional structures, greater mobilization of farmers into cooperatives, and better resources to manage credit for small- holders (ADB 2005 ; IEG 2012 ).
During our time in Southeast Asia, the most memorable meeting was the one with Wilmar’s Sustainability Division. Wilmar, one of the largest oilpalm plantation owners in Indonesia and Malaysia, is headquartered in Singapore. Its representatives gave a well-polished presentation delineating their commitment to sustainability in the form of No Deforestation, No Peat and No Exploitation. They introduced their preliminary efforts to track the origin of their palmoil. They also presented their grievance process to find and deal with offenders. Overall, I was impressed by their openness and humility. They owned up to their historically bad reputation. They also owned up to the fact that their sustainability policy is currently very young and consequently, not yet nearly as effective as it could be. As such, leaving the meeting, I had an overall feeling of hope. It was encouraging to see the world’s largest palmoil producer devoting resources to sustainability.
A value chain analysis (VCA) includes the range of activities performed within a firm or supply chain system to produce a specific output . The purpose of value chain analysis is to identify the value chain stages in which companies can increase value for customers or reduce costs. Decreasing costs or increasing added-value can make a company more competitive. In this study, a value chain analysis is conducted to identify improvements in crude palmoil (CPO) supply chain that enable enterprises to gain enhanced value added to the company’s CPO value chain.
In Word Agroforestry Centre’s technical brief titled “Socio-Economic Impact Assessment of Palmoil production”,  focused on the social and economic context in Oilpalm production. They noted that about 12 or 9 % of villages located about 10 or 20km around an oilpalm plantation make their major income from oilpalm activities as smallholders or labour; thus, such villages have performed well on physical, financial and human capital as they show low level of malnutrition, higher income (2-3times within 5years for households), immigration and more males. However, land access and rights remained the major social cost of Oilpalm production. A one way ANOVA test was used to analyse GPS data, village maps, data from BPS (2003) and PODES (extensive village database, 2008) for 23 oilpalm estates. Livelihood was measured with household survey of 78villages based on physical, financial and human capital highlighted earlier.
SWOT stands for strengths, weaknesses, opportunities, and threats. Understandings of strengths, weaknesses, opportunities, and threats in the SWOT analysis (Rangkuti, 2006). According to Jurevicius (2013) and Harrison (2010) the SWOT analysis component is: 1) Strenght (S) is strength analysis, situation or condition that is the strength of an organization or company at the moment, 2) Weaknesses (W) is weakness analysis, situations or conditions that are the weakness of an organization or company at this time, 3) Opportunity (O) is the analysis of opportunities, situations or conditions that are opportunities outside an organization or company and provide opportunities for the organization to grow in the future, 4) Threats (T) is threat analysis, how to analyze the challenges or threats that must be faced by a company or organization to deal with a variety of unfavorable environmental factors on a company or organization that causes decline. If not immediately overcome, the threat will be a barrier for a business concerned either in the present or in the future.
Crop raiding by Bornean elephants (Elephas maximus borneensis) is increasing rapidly in North Kalimantan, mainly due to a rapid conversion of swiddens and secondary forest into oilpalm plantations. In the Tulin Onsoi subdistrict, the area used by oilpalm plantations has grown from 3,302.71 ha in 2001 to 21,124.93 ha in 2014. Particularly from 2006 to 2010, the area covered by oilpalm plantations increased rapidly (418%). Preventing further encroachment of oilpalm plantations in elephant habitat and regulating land use change are keys to stop further population declines and make way for the reestablishment of a viable elephant population in Kalimantan. Crop raiding is a strong determinant of the local people’s perceptions of elephants and risks eroding cultural values that enabled people to coexist with elephants. People’s perception and attitude toward elephants are generally negative. Nevertheless, negative attitudes have not led to cases of retaliation in the Tulin Onsoi subdistrict. Public education at the community level could strengthen cultural values and foster coexistence between humans and elephants.