Indonesia’s crude palm oil export projected to rise in next 10 years

Workers are unloading crude palm oil at a port in Cilincing, Jakarta (Source: tempo.co)

In 2017, the export value of palm oil and its derivative products (excluding biodiesel and oleochemicals) skyrocketed to nearly 23 billion USD, up about 26 percent against the 18.22 billion USD of the previous year.

The export volume of palm oil is directly proportional to production, along with the increase of average price, Arifin said, adding that the trend of this export increase will still happen in 2018. However, the issue of sustainability will remain an obstacle.

The Indonesian government should continue to conduct trade diplomacy to protect foreign exchange because of trade and tariff barriers, the economist noted.

In addition, the government needs to open new export markets, such as countries in Central Africa, South Africa and Middle East and former Soviet Union countries, which are considered as promising markets.

Nonetheless, Arifin also warned that traditional export destinations, such as Western Europe, the US, Japan, India, Pakistan, and China, are not abandoned. According to him, various efforts to inhibit the growth of palm oil industry will continue to be launched due to increasingly tight competition in vegetable oil trade.

Indonesia is still dependant on traditional markets, which account for about 70 percent of the total importers. Meanwhile, Pakistan, Eastern Europe, South Africa, and North Africa also have high potential. Therefore, in 2018, Indonesia should open alternative markets, Arifin said.

Indonesia is among the world’s leading palm oil manufacturers along with Malaysia, as the two countries make up 90 percent of palm oil production worldwide. In 2018, Indonesia’s palm oil production is projected to hit 37.7 million tonnes.-VNA