Following policy changes in 2011 including export tax reforms and tax breaks tailored to increase growth in its palm oil industry, Indonesia saw US$2.7 billion in investments in its downstream palm oil sector between 2012 and 2014. In that time, 14 pam oil processing projects were initiated in the country’s main production region of North Sumatra according to the country’s Industry Minister M.S. Hidayat. The influx of capital boosted annual production of domestic cooking oil operations by 73% since 2011 to reach 45 million tons in early 2014, and boosted the production fatty acids by 47% to 1.1 million tons and boosted the production of fatty alcohols by 85% to 1.2 million tons in the same time period. In addition, it drove Indonesia’s biodiesel sector to increase production by 57% to 5.67 million tons between 2011 and 2014, and increased the variety of palm oil derivatives produced from 54 to 154. This growth has changed the country’s export structure which had been mainly crude palm oil, but which is now 70% palm oil derivatives.
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