Prof. Budi made the remarks during a National Palm Oil Seminar held by UPN “Veteran” Yogyakarta, attended online by on Thursday (22/1/2026).

“Oil palm grows very well and is highly productive in Indonesia, even though much of it develops on marginal soils,” said Prof. Budi.

He noted that Indonesia currently has the largest oil palm plantation area in the world, spanning more than 16.8 million hectares. This scale positions palm oil not merely as a plantation commodity, but also as a major economic driver from the local to international level.

A Key Economic Engine and Export Earner

According to Prof. Budi, palm oil contributes significantly to the national economy through export earnings. He cited that in 2022, palm oil foreign exchange revenue exceeded US$39 billion, reinforcing the industry’s role as one of Indonesia’s key trade pillars.

He also pointed out that palm oil contributes to Indonesia’s Gross Domestic Product (GDP), reaching around 3.2%, and even rising to 3.5% during the Covid-19 pandemic period.

Beyond macro indicators, he stressed palm oil’s strong social impact, as the sector provides large-scale employment and supports millions of Indonesian households.

“Palm oil provides jobs for more than 16 million people and supports the livelihoods of millions of Indonesians,” he said.

Prof. Budi added that oil palm has a strong advantage because it is a multi-product commodity, with around 160 derivative products, ranging from food, oleochemicals, cosmetics, to energy.

As such, he argued downstream development remains a strategic move—not only to expand markets but also to increase domestic value-added and create more jobs.

“Palm oil downstreaming is a strategic step to increase value-added and open wider job opportunities,” he stressed.

Palm Oil and the Carbon Debate

Prof. Budi also addressed the environmental dimension often debated internationally. He explained that oil palm has high photosynthetic capacity, making it effective in capturing energy and absorbing carbon through biological processes.

He described natural balance through photosynthesis, respiration, and land use change—an issue often highlighted in emissions discussions.

He even referred to oil palm as an effective “energy binding machine,” as plantations store energy in biomass and contribute to oxygen production.

Nevertheless, he emphasized that palm oil development must be accompanied by a more comprehensive understanding of its role in sustainable development. He called for a “relative sustainable development” approach that considers multiple dimensions, from the physical-environmental and socio-economic aspects to broader life dimensions.

“We must continue to enhance understanding of palm oil’s role in sustainable development in a relative sense,” he said.

Land Legality Remains a Fundamental Challenge

On the other hand, Prof. Budi highlighted a major structural issue facing the palm oil industry—especially among smallholders—namely land legality.

He pointed to around 3.81 million hectares of land claimed as forest areas, although in reality the land is no longer forested. He warned that this issue should not be left unresolved, as it creates business uncertainty, hampers plantation development, and triggers conflicts on the ground.

He underlined the need to address smallholder land legality within a legal framework that ensures certainty and protects rights. He stressed the importance of balancing legal certainty, benefits, and justice—principles aligned with Gustav Radbruch’s view of law.

“The fundamental issue for smallholder palm oil is land legality. Its resolution must prioritize certainty, benefits, and justice,” he concluded.