BPDPKS Raises Palm Oil Fund’s Sustainability through Government Bonds

JAKARTA–The Indonesia Oil Palm Plantation Fund Management Agency (BPDPKS) plans to expand placement of its funds under management to some productive investment instruments, including government bonds (SUN) in 2020.  Currently, BPDPKS places the funds in deposits in state-owned banks.

BPDPKS’ President Director Dono Boestami said that funds placement in government bonds is aimed to seek better returns and to help maintain the palm oil fund’s sustainability in the long run by channeling to other option rather than just rely on the collected levies which is BPDPKS main and largest source of revenue.

"The funds will be placed in productive and safe investment instruments including government bonds," Dono said in Jakarta, Thursday (12/26/2019).

He added that BPDPKS has prepared the necessary measures, including coordinating with the Ministry of Finance in preparing the business processes, managing risk management and other infrastructure needed to maintain the implementation of these investments so that they are always done in a proper administration and legal manners.

"At present all the regulatory instruments and business processes are ready to carry out these investments plan," said Dono.

Dono explained that BPDPKS had earned the approval for the long-term investment allocation from the Coordinating Economic Ministry which is also the BPDPKS Steering Committee.

Dono assured that his institution will continue to monitor the market situation closely, as well as coordinate with Directorate General of Budget Financing and Risk Management of the Ministry of Finance before investing in government bonds.  

Since its establishment in 2015, BPDPKS has always enjoyed increasing gain in its funds under management. In 2019, BPDPKS’ funds under management rose 33% to Rp1.37 trillion from Rp1.03 trillion in 2018.

Mandated by the Presidential Regulation No. 61/2015, BPDPKS collects export levies from palm oil products, manages the funds and disburse the funds based on the program set by relevant ministries and other government institutions. In 2019, the government prompted to temporary remove the export levies due to the crude palm oil (CPO) price slump.

BPDPKS has been using palm oil funds to finance its operations, including to help pay for biodiesel incentives, replanting, research, and development for farmers to boost their production, etc.  **