JAKARTA – The policy of import tariff of 32% imposed by USA President Donald Trump against Indonesia has significantly burdened palm oil exports. The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono said that the new USA tariff will reduce Indonesian competitiveness in the USA market, where Indonesian exports have been rising during the last few years and are projected to keep growing in the future.
RI’s Palm Exports To USA Steadily Rise
During the last five years, the palm oil exports of Indonesia to USA have shown a rising trend. Indonesia’s palm exports to USA increased from 1.5 million tons in 2020 to 2.5 million tons in 2023. Despite decrease to 2.2 million tons in 2024, the export value is estimated at US$2.9 billion, and its market share reached 89% of the total palm oil exports to the USA.
“Palm oil has become the main raw material of food industries in USA, such as margarine, which cannot be replaced by other vegetable oils due to health issues such as trans fat from soybean,” said Edi.
New Tariff Impact and Export Burden
The application of 32% tariff by the USA is seen causing heavier burden to Indonesia compared to its competitors, such as Malaysia, which is only slapped with a new import tariff of 24%. Besides, business players in Indonesia have been burdened with three kinds of export obligations, namely domestic market obligation (DMO), Export Tariff (PE), and Export Tax (BK), which amounts to US$221 per metric ton, higher than Malaysia at only US$140 per metric ton.
“Such condition makes Indonesian palm oil less competitive. That’s why we ask the government to consider reducing the export burden of palm oil to keep its competitiveness in USA market,” he said.
Eddy added that Indonesia is also facing challenges of logistics, as shipping from Malaysia to USA is closer than Indonesia.
Short and Long Term Strategy
Eddy said that GAPKI has discussed the issue with the government, including with the economic coordinating ministry and finance ministry. He expressed appreciation to the government that has signalled to review the export burdens as a short term way to maintain the competitiveness of Indonesian palm oil in the USA market.
“In short term, the only way for us to stay competitive is by reducing our export burden. In long term, we have to continually increase our productivity,” he said.
Efforts to increase productivity are pursued through the use of pollinating insects from Tanzania and the use of organic fertilizer to reduce reliance on imported chemical fertilizers.
Market Diversification and Global Recession Anticipation
Eddy underlined the importance of diversifying the market, especially aimed to anticipate further trade wars that are potential to affect other markets, such as China and European Union (EU).
“We target Latin America and Africa as alternative markets that we’re now sounding out. Next month (May 2025) we’ll be conducting a trade mission to Egypt to expand our market,” he said.
Eddy also expressed his concerns over the risk of global recession that could reduce export demand as a whole. “It’s important for us to have a strategy, which is not merely a reactive response to the USA tariff, but also anticipative about global dynamics.
Optimism With Government Support
Eddy expressed his optimism that with the government’s quick steps and supportive policies, Indonesia will keep and even increase its palm oil exports to USA.
“I believe this tariff problem can be solved, our export to USA will keep rising as it has been demanded by the food industries in the country,” he said. (Summary of Corporate Insight, Live BeritaSatu): https://www.youtube.com/watch?v=1_MhejGalg0
