17/10/2012 (Jakarta Globe) - Samarinda. The government of East Kalimantan is set to provide 1.4 million hectares of land to be planted with palm fruit trees until 2014, more than doubling the area in a move that should boost crude palm oil production.

“We have seen some positive results,” Awang Faroek Ishak, governor of East Kalimantan, said on Monday in Samarinda, the province’s capital. “We now want to cultivate more land with crude palm oil.”

The current cultivation area for CPO stands at 1 million hectares, Awang said.

Commodities such as crude palm oil have been the backbone for the economy of East Kalimantan, he said, and because of that, the government expects a positive response to its efforts to provide more land for agriculture.

With more cultivated lands, more CPO processing plants will operate in East Kalimantan, Awang said, adding that there are currently 43 CPO processing plants operating in the province with a combined production of 2.8 million tons per year.

The plants are located in Kutai Kartanegara, Paser, East Kutai, and Penajam Paser Utara. Awang said the output of the CPO plants in East Kalimantan is expected to have more “added value,” meaning a greater proportion of the production process takes place locally.

When the CPO plants create more “added value,” palm oil companies do not need to sell their products overseas cheaply.

Awang said that East Kalimantan will boost its efforts to become one of the main commodity centers in the country. Indonesia is one of the world’s biggest producers of CPO. Neighboring Malaysia and Thailand are also big CPO producers.

The Industry Ministry said last month that it would invest $3 billion in Indonesian downstream businesses in the palm oil sector in the next two years.

It hoped that its tax policies would attract entrepreneurs to the processing component of the industry and discourage the export of raw CPO.

Indonesia has been in vigorous competition with Malaysia to sell palm oil on the global market, with the two countries using taxation policies to make their exports more desirable. The industry has been plagued with concerns over its environmental impact. Beyond palm oil, Kalimantan is rich in resources such as coal.