Indonesia Growth of Economics and the Industrialization Biodiesel Based CPO

Faurani Santi Singagerda, Tri Yuni Hendrowati, Anuar Sanusi


This study aimed to analyses the impact of palm oil-based biodiesel development on growth and poverty in Indonesia that combined with government policy using simultaneous equation econometric 2 SLS’s models. The result shows that if the export tax, and government expenditure in industry increase; then domestic exchange rate (IDR) and interest rate decrease, those will give positive impact on economy growth and vice versa gives a negative impact to poverty. The simulation may apply to know the impact on economy growth, and poverty in Indonesia by the development. The study found that palm oil-based biodiesel development can create a growth and poverty in Indonesia and CPO biodiesel development can be synergized with the increasing export tax and government expenditure in industry, so growth and poverty-reducing in Indonesia will be better and qualify. However, government must maintain stability of exchange rate fluctuation because the impact can reduce CPO production industry.

Keywords: Crude Palm Oil, Energy, Industry, Economic growth, Poverty

JEL Classifications: E24, E27, C5, O31

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