Brighten-KRC: 1 edition

Written by Indra

Wednesday, 25 March 2009 15:19

indra_ Review on Recent Issues of Agriculture, Forestry, and Bio-Energy Sectors in Indonesia

By: Indra (leader), Dina, Dicky, Dwi.

EXECUTIVE SUMMARY

Agricultural Sector

A majority of people in Indonesia are living and working in rural areas, and most of their income is derived from agricultural activities. Rice, which has dominated agricultural production in Indonesia, is the main staple food for most households for both urban and rural alike. The investment on food crops and plantation have been varying in value in the past six years, however, the number of projects that are approved by the government indicate an increasing trend. Food crops and plantation are included in primary sector, which also comprises of livestock, forestry, fishery, and mining. For the crops commodity, harvested area under rice and corn have been increasing in general in the last few years while that of soybean, sweet potato and cassava have been on the decrease.

Forestry Sector

At the moment, Indonesia is faced crucial problems in the forestry sector such as forest fires and degraded land that tend to increase in the future. In recent years, Indonesia has been loosing up to 2 million hectares annually (World Bank, 2006), mainly due to illegal logging and land conversion brought about by problems of excessive processing capacity, lack of effective management and poor law enforcement. Indonesia’s forest areas are threatened with degradation, fragmentation and destruction. Forest loss undermines rural livelihoods and ecosystem services. Poor forest governance damages the investment climate, rural economic potential, Indonesia’s competitiveness and international reputation. Forest crime exacerbates problems of budget and fiscal balance, and diverts public revenues that could be better spent on poverty reduction and development goals.

Bio-energy Sector

The Minister for Energy and Mineral Resources of Republic of Indonesia launched a new ministerial regulation (No. 32/2008) on September 26, 2008 about supplying, utilizing, and trading arrangement of biofuels. It is a revision of the regulation No. 51/2006 concerning biofuels trading guidelines. The biofuels as stated in the regulation are categorized into three types; bio-ethanol (E100), bio-diesel (B100) and pure plantation oil (O100).
With respect to the utilization policy, the biofuels stated in this regulation are categorized into two types i.e. specific (regulated) and general type. The government regulation will group the utilization of the specific (regulated) biofuels, in terms of type, standard, specification, volume, pricing (subsidizing), and blending arrangement with the other type of fuels. Meanwhile, the government will not provide a subsidizing scheme for the general type, so business entities have an authority in managing their prices based on consumer purchasing power, sustainability of supply and distribution, and the economic margin consideration.