JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono has stated that despite export tariff to Europe could be negotiated to zero percent, non-tariff barriers can still stand as a serious threat to Indonesia’s palm oil exports.
Eddy Martono was commenting on the trade deal between Indonesia and European Union (EU) under the scheme of Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU–CEPA) that had reached its final stage. “The IEU–CEPA will be useless if the non-tariff barriers of EU, such as the European Union Deforestation Regulation (EUDR), are still applied against our palm oil products. The tariff could be zero percent, but if our products are considered unable to comply with the regulations, then our products cannot enter the EU market,” Eddy Martono told CNBC Indonesia, on Monday (15/7/2025).
The EUDR requires that agricultural products like palm oil have to be proven not resulted from the activities of deforestation after 31 December 2020. “If we cannot prove the legality of products and locations of plantations, they will still reject our products. So, the EUDR is not a matter of tariff, but about their environmental standard,” he said.
Eddy pointed out that various rigorous regulations, such as process of due diligence, certification, companies’ obligation to buy fresh fruit bunches from smallholders, also increase the operational costs of palm oil industry players.
He said that GAPKI has also urged the Indonesian government to pursue government-to-government (G2G) approach to reach technical agreements in fulfilling the requirements of EUDR. It is aimed to ensure that Indonesia’s palm oil products that already meet the standards can be accepted without undergoing a long and strict checking.
“We need a national system of traceability which is solid and acknowledged by EU. Regarding this, there should be a joint effort between the government and industrial players,” added Eddy.
Currently, the European Union (EU) still categorizes Indonesia as medium risk country, causing palm oil derivative products like biodiesel is slapped with import tariff of 3.0 percent. But if the risk status raised, the tariff could surge up to 9.0 percent, which is seen as potential to weaken the competitiveness of Indonesia’s palm oil exports.
Eddy has also reminded on the need of more integrated regulations to prevent the palm oil industries from being continually harmed by the regulations applied in the export destination countries.
He cited the example of including oil palm trees into the category of forest plants as a strategic step. “Biologically, the oil palm is a forest plant, and can be used for reforestation. Malaysia has long applied such category. We in Indonesia can also do the same,” he said.
According to Eddy, by including oil palm into the classification of forest plant, Indonesia can implement an integrated system of reforestation combining oil palm and woody plants, while lifting the image of palm oil as a green commodity.
Eddy said that GAPKI urged the government to design policies as such to support the national palm oil industries from upstream to downstream, with a view to strengthening Indonesia’s position in the global supply chain.
“If our policy is solid and wholistic, other countries will find it difficult to design new regulations that will hinder our exports,” said Eddy. (*)
