19/12/2012 (Jakarta Post) - The Riau provincial administration has demanded that the central government permit the creation of a production-sharing fund from the palm oil industry as the province does not receive a fair share of the contribution the commodity makes it to the state’s coffers.

Head of the Riau Regional Income Office Said Mukri said in Pekanbaru on Tuesday that the province had prepared a proposal to both the Agriculture and Finance Ministries.

“According to the schedule, the proposal on the palm oil production-sharing fund will be unveiled by the end of this month. A draft recommendation has been prepared by universities and is expected to be presented to the President in January, 2013,” Mukri said.

He further said that demands for such a fund had actually been made for a long time. Unfortunately, he said, palm oil production centers were not united so they had not received a positive response from the central government, he said.

“Now we are not playing on the local stage any longer, otherwise we’ll be ignored. Eighteen palm oil production provinces in Indonesia are invited to struggle for their rights,” Mukri said.

According to him, several major palm-oil producing provinces in Indonesia, like Central Kalimantan, North Sumatra, Jambi and South Sumatra, have expressed their support for the struggle.

“All the palm-oil producing provinces have appointed Riau as the coordinator for this struggle. We’re optimistic now is the time to realize our demands,” he added.

Head of the Riau Plantation Office Zulher explained that the last meeting of 19 palm-oil producing provinces was held in Central Kalimantan last September, where it was agreed that they would demand a production-sharing fund of 10 to 15 percent.

“The 10-15 percent portion is to be taken in palm oil exit taxes,” he said. “It’s fair for palm-oil producers to demand the production-sharing fund, because the central government applies similar schemes for other commodities like tobacco,” Zulher said.

He cited as an example how Riau, which has the largest number of oil palm plantations in Indonesia, could only watch as about 6.6 million tons of crude palm oil (CPO) were transported to the central government every year.

“About Rp 12 trillion [US$1.2 billion] from CPO exports has been contributed by Riau for years to the state’s coffers. Riau does not get anything. Is it too much for us to ask for a portion of 10 to 15 percent? This fund will be very beneficial for the Riau people,” he said.

Zulher explained that palm oil producers like Riau only felt the negative aspects in the form of environmental destruction and damage to the road networks resulting from the massive expansion of oil palm plantations. No special funds are allocated by the central government for the repair of the roads damaged in the transportation of CPO.

In Riau not only the national roads were damaged, but also provincial roads and those in villages, districts and regencies, and local administrations had been forced to set aside funds from their regional budgets for their repair, he said.