CPO: Indonesia Ready to Fight Back
Indonesia is ready to fight back against the restrictions imposed by a number of countries on the country’s export of crude palm oil (CPO) and its derivative products.
Motorists drive past oil palm plantations on Monday (12/3) in Sei Mangkei, Bosar Maligas district, Simalungun, North Sumatra.
JAKARTA, KOMPAS — Indonesia is ready to fight back against the restrictions imposed by a number of countries on the country’s export of crude palm oil (CPO) and its derivative products.
Palm oil is Indonesia’s main non-oil and gas export, and supports the livelihood of about 22 million people.
At present, there are three countries and one economic region that have imposed restrictions on exports of Indonesia’s CPO and its derivatives, namely the United States, Norway, India and the European Union.
Based on data from the Trade Ministry, the export value of CPO and its derivative products, which reached a total of US$20.02 billion in 2013, rose to $22.15 billion in 2014. The export value, however, dropped to $18.61 billion in 2015 and to $18.11 billion 2016 before bouncing back to $22.77 billion in 2017.
The total value of Indonesian exports reached $168.73 billion in 2017, with oil and gas exports contributing about $152.99 billion. The CPO exports accounted for 14.9 percent of non-oil and gas exports and 13.5 percent to total exports.
According to information obtained by Kompas, a number of parties, such as the government, businesspeople, farmers and researchers, are committed to working together to oppose the trade restrictions imposed on the CPO.
In addition to providing huge foreign exchange and being a major contributor to non-oil exports, oil palm plantations and the processing industry support the livelihood of at least 22 million people. Indonesia\'s CPO production in 2017 reached 38 million tons, with 31 million tons exported to several countries.
Trade Minister Enggartiasto Lukita said he had sent letters and initiated bilateral talks with a number of countries to protest the trade restrictions. "Especially for the EU, we will bring the case of the EU palm oil resolution to the World Trade Organization (WTO)," he said.
The European Parliament passed a resolution in April to limit the use of palm oil and other vegetable oils in EU member countries by 2021.
The Norwegian parliament has asked the government to prohibit the public procurement of CPO-based biofuel products and its derivative products. Since eight months ago, India has tripled import duties on CPO and its derivative products. Currently, the import tariff on CPO is 44 percent and 54 percent on its derivative products. Meanwhile, the US has accused Indonesia of dumping biodiesel. The US Department of Commerce (USDOC) has decided to impose the import tariff on Indonesian biodiesel in a range between 34.45 percent to 64.73 percent.
The US International Trade Commission is assessing the US industrial losses due to the Indonesia’s biodiesel exports. If a loss is found, the USDOC will instruct the US Customs and Border Protection Agency to impose the import tariff.
Trade Minister Enggartiasto said Indonesia would retaliate against the countries that had imposed restrictions on Indonesian exports. "We will file a letter to protest the trade restriction on Indonesia’s CPO to Norway. If the country continues to prohibit the public procurement of CPO-based fuels and their derivatives, we will impose a restriction on Norway’s fish exports," he said.
The executive director of the Association of Indonesian Biofuel Producers, Paulus Tjakrawan, said Indonesia had also filed a lawsuit with the US international trade court on Feb. 4, 2018. Previously, a number of Indonesian companies had also filed legal suits against the EU’s subsidy and dumping charges on Indonesia’s CPO.
Residents harvest oil palm fruit on Saturday (23/1) in Alue Gro of Sampoiniet district, Aceh Jaya regency, Aceh.
Since 1980
The director of the Center for Oil Palm Research (PPKS), Hasril Hasan Siregar, said the trade restrictions imposed on Indonesia’s CPO had been in effect since 1980 when Indonesia\'s CPO entered the international market and became a competitor of vegetable oil commodities, such as sunflower oil and soybean oil.
The opposition against Indonesia’s CPO is getting bigger as Indonesia\'s exports begin to soar in 2006, which made Indonesia as the number one exporter of the commodity.
The director general of plantation at the Agriculture Ministry, Bambang, believes that the negative campaign against Indonesia\'s CPO is related to commodity competition. A number of issues have been raised such as deforestation, forest fires and child labor, ignoring the improvement which has so far been made by the Indonesian government, the CPO industry and oil palm farmers.
Bambang acknowledged that the governance of oil palm plantations should be further promoted although a number of improvements have been made.
One of the problems arising from the massive clearing of land for oil palm plantations is their environmental impact, including the encroachment of forest areas. In early 2017, for example, the office of the Gunung Leuser National Park, took back about 75 hectares of forest areas in Langkat, North Sumatra from 18 forest encroachers. The areas have been used for oil palm plantations for about 15 years.
National strategy
The chairman of the Association of Oil Palm Planations, Joko Supriyono, acknowledges that Indonesia does not have yet a national strategy to deal with the attacks on palm oil in the international market. The movement against the trade restriction in CPO exports is still scattered and no synergy has so far been made with all parties involved.
Coordinating Economic Minister Darmin Nasution said the government and businesses continued to fight the negative campaign against Indonesia’s palm oil. "In the country, there is the fund management board of oil palm plantations and abroad we have a CPO fund that helped defend the interests of Indonesian palm oil," he said.
Indonesia has also adopted sustainable management in oil palm plantations through Indonesian Sustainable Palm Oil (ISPO) certification.
A number of farmers have successfully raised their economic status thanks to oil palm plantations. They include Supar, 60; Tugimin, 57; and Pintauli Manurung, 72, a resident in Simalungun Regency, North Sumatra. The farmers, who carried out farming activities in small land areas during the 980-1990 period, have now been able to send their children to universities thanks to palm oil.
(WSI/MAR/HEN/MKN/RAZ)
