Palm Oil Industry as Papua’s New Economic Center

Palm Oil Industry as Papuas New Economic Center
Palm Oil Industry as Papuas New Economic Center

The existence of the palm oil industry is a strategic position for the national economy. In addition to being able to build food security and energy sovereignty, the palm oil industry is also continuously encouraged to develop downstreaming in order to boost domestic economic activities.

Quoting, to date, palm oil plantations and palm oil mills have spread to more than 200 districts in Indonesia. The production of crude palm oil (CPO), palm kernel oil (PKO), and biomass has become the backbone of the economy for the central areas of the palm oil industry. One of them is in Papua Province. Since starting its economic activities in 1998, Tunas Sawa Erma (TSE) Group is committed in contributing to Papua’s development.

This determination has been carried out until now, when the two operational areas of the TSE Group, Merauke and Boven Digoel, have been observed as new economic centers for Papua. The TSE Group, through various efforts such as employment, carries out the development contribution to the creation of an economic center in Papua. It was recorded that until the end of 2020, 11,322 people worked at the TSE Group, including Papuans.

Another impact of the existence of the TSE Group is the contribution to the local revenue (PAD). At least 40% of the PADs of Merauke Regency and Boven Digoel Regency are donations from the TSE Group.

Another contribution is through corporate tax payments to local governments. For land and building taxes (PBB), for instance, the TSE Group paid around Rp. 20 billion in 2020. Apart from the PBB, the TSE Group also pays other taxes such as motor vehicle tax and non-tax state revenue (PNBP), namely the provision of forest resources and reforestation funds from the forestry sector.

This state revenue is deposited to the central government which is then channeled to the regions, including for development purposes. The growth of the economic center of Papua cannot be separated from the infrastructure development that is often initiated by the TSE Group.

Palm Oil Industry as Papuas New Economic Center1
Palm Oil Industry as Papuas New Economic Center1

TSE Group Director, Luwy Leunufna said that one of the main focuses of the company when it started operating in Papua was access to land transportation, both for traffic of people and goods. “In the past, we had to spend the night to arrive at Asiki from Jayapura. Now, we arrive in less than five hours,” said Luwy in a written statement.

Luwy said that to accelerate Papua’s development, the company also provides various entrepreneurial trainings to indigenous Papuans who live around the operational area. “This support is intended so that the community can develop independently so that the economic center in Papua can be wider,” he said.

The Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (PASPI), Tungkot Sipayung, also conveyed the relationship between the palm oil industry and the creation of new strong economic centers.

Tungkot said that there were 10 provinces that became centers of new economic growth along with the development of the palm oil industry, and included in the list was Papua. “Regencies that have palm oil centers develop faster than regencies that do not have palm oil. This is the result of empirical research and the results are the same as those of the World Bank,” said Tungkot.