East Kalimantan Environmentally Sustainable Development Strategy
East Kalimantan Environmentally Sustainable Development Strategy
East Kalimantan Environmentally Sustainable Development Strategy
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39<br />
Including financial transfers for REDD, GDP from palm oil could increase to<br />
IDR 2.8 trillion by 2030<br />
<strong>East</strong> <strong>Kalimantan</strong>’s real GDP forecast<br />
IDR Trillions<br />
3.0<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
0.5<br />
0<br />
2005<br />
SOURCE: team analysis<br />
10<br />
15<br />
1 Including REDD payments for reduced land conversion<br />
20<br />
25<br />
2030<br />
<strong>Environmentally</strong><br />
<strong>Sustainable</strong><br />
<strong>Development</strong><br />
<strong>Strategy</strong> 1<br />
Business<br />
as usual<br />
CAGR<br />
location. Raising yields in <strong>East</strong> <strong>Kalimantan</strong> up to Indonesia’s average would result in 9 percent<br />
higher production from a given hectare of oil palm plantation, which would represent a significant<br />
additional contribution to GDP.Yield improvements might also be seen as a way to decrease the<br />
demand for converting land into oil palm plantations, which could result in lower emissions from<br />
the conversion process. However, yield improvements will not result in additional employment , as<br />
the number of employees needed within the labor-intensive palm oil sector is more directly related<br />
to area planted than output.<br />
DRAFT<br />
Box 1 discusses a 10-step approach to palm oil productivity improvements in Harapan Sawit<br />
Lestari Estate in West <strong>Kalimantan</strong>.<br />
Several opportunities exist for investing in the downstream manufacturing of CPOderived<br />
products, which range from food oils and biofuels to oleochemicals. 12 Our<br />
conversations with potential investors have largely ruled out downstream manufacturing in food<br />
oils as companies prefer to process these near their consumer markets. We have focused on<br />
increasing the production of oleochemicals but, according to investors, a number of regulatory and<br />
fiscal obstacles discourage new investments in this area. Whereas Malaysia uses differing export<br />
duties to promote refined palm oil products over crude palm oil, Indonesia does not. In addition,<br />
good transportation is important for downstream processing. The lack of seaports with refined<br />
palm oil handling capacities and sufficient roads to enable fast transportation to centrally located<br />
refineries, also act as a disincentive to downstream manufacturing (EXHIBIT 19). We have identified<br />
improved infrastructure as a requirement to attract further investments in downstream refining.<br />
10%<br />
8%<br />
Exhibit 18<br />
Biofuels might be a sizeable opportunity as demand is rising fast, especially in Europe. The<br />
European Union has recently released new criteria that oil palm plantations have to meet if they<br />
12 Oleochemicals are used in soap products such as detergent, toothpaste, shampoo, and face soap