Jakarta – The Indonesian Palm Oil Association (Gapki) Chairman Joko Supriyono said the down-streaming process of palm oil industry has been proceeding well. It has been indicated by the export decrease of unprocessed crude palm oil (CPO).
“Export of CPO had declined to only about 20% during the last few years. Even by September 2021, it had been reduced to only 9%. The rest has been exported as processed products of palm oil,” Joko said recently.
According to him, the down-streaming process of palm oil industry has been accelerated by the government’s regulations, which include the palm oil export tax (PE) and the palm oil duty (BK),” he said.
Joko said that Indonesian palm oil exports are now mostly processed products, such as refined, bleached, deodorized (RBD) in various kinds of products, including oleo-chemical, biodiesel, processed crude palm kernel oil (CPKO), and other palm oil products that are locally processed.
“So, export of CPO has declined to the minimum level. It proves that Indonesia’s process of down-streaming in the palm oil industry has been proceeding well, and on the right track. Such trend will continue in the future,” he said.
According to Joko, the prices of CPO and the downstream products, such as the RBD, are often not much different. “It often happens that the price of RBD in global market is more expensive than CPO. But conversely, the CPO price is also often more expensive than the RBD. The government applies the export tax to drive the growth of local palm oil industries,” he said.
Based on the government policy, Joko said that the export tax of CPO is higher than RBD. The higher its price, then the higher will be its export tax. But in addition to that, the government also applied palm oil duty. Combined the two, then the higher the prices of both CPO and palm oil processed products, the higher will be their export tax and duty (PE and BK).
Joko added that with the application of PE and BK, the net price of CPO and the processed products is far below the global market price. Even, the price of CPO in Indonesia is cheaper than that of the processed products.
“That’s the factor that has caused Indonesia’s exports of palm oil have been dominated by processed products. That means, as the impact of PE and BK, exporting the processed palm oil products is more profitable than exporting the CPO. So, based on the fact, the down-streaming process in the palm oil industry is relatively proceeding well due to the government policy of the PE and BK,” said Joko.
Global market
Joko Supriyono said the development of downstream palm oil industries in Indonesia should be implemented by considering the condition of the international market. “We have to consider the types of downstream products being demanded and can easily penetrate the global market. Now, we see the fact that processed palm oil products such as the biodiesel are encountering some challenges at the global market,” he said.
“In developing the downstream industries, we have to always consider the requirements of the global market which is very competitive. So, our processed palm oil products should match the market need,” he asserted.
Joko cited the biodiesel production as an example. It has been successful as its production in big volume and supported by the PE and BK policies and the regulation on mandatory biodiesel. “Actually, Indonesia can further increase its biodiesel production. And it can sell well at the global market,” he said.
But he noted, the biodiesel is now facing some challenges at the global market, especially in the European Union (EU, which will phase out the CPO as the raw material of biodiesel due to the issues related to the climate change. (*)
Source: Investor Daily | Featured image via palmoillabour.network
