A number of Dutch based corporations are currently exploring the capital investment in Indonesia’s sustainable palm oil sector in order to ensure the preservation of the product’s upstream and downstream.

IDH-The Sustainable Trade Initiative Director, Fitrian Ardiansyah, explained that European companies have committed to utilize sustainable palm oil products in 2020. They consist of downstream industries and trade companies that are mostly based in the Netherlands which acts as the entrance gate for crude palm oil based products.

In order to confirm the pledge, Fitrian says that companies must establish a joint venture with upstream suppliers. Currently IDH has offered Musi Banyuasin District in South Sumatera as their initial target for investment.

“The CPO potential in Musi Banyuasin is 1.8 million ton annually. There aren’t many that are certified, but the district’s regent, company, up to the farmers are already committed,’ he said on Thursday, April 20, 2017.

Fitrian says that there are at least two investment schemes that can be practiced by the Dutch companies. Firstly, a CPO buyer must create a binding contract with the farmers and the palm oil factory. Secondly, investors will also fund the rejuvenation of the field either with direct funds or interest subsidy.

Fitrian predicts that the realization of their investments in the next three years. Other than being able to obtain sustainable products, their supply chain costs will be much more efficient since they will directly partner with the upstream industry.

source: tempo.co