Despite Of Covid-19, Palm Oil Export Still Promising

Palm oil export is still seen promising despite of the outbreak of Coronavirus disease 2019 (Covid-19) which has impacted almost all of business sectors in almost all countries across the globe.

Considering such a condition, Deputy Minister of Trade Jerry Sambuaga has called on all stakeholders in the palm oil industry to join forces in maintaining the good performance of the industry. “We have to stay optimistic on the prospect of our palm oil export in the future. It is because the palm oil is still the most economic choice among all vegetable oils in the world,” said Jerry in a press release issued last week.

Jerry said that currently the main obstacle facing the palm oil industry is the Covid-19 pandemic, which has decreased the exports of crude palm oil (CPO) and derivative products in a number of foreign countries. The palm oil exports decreased during the first few months in 2020 after seeing an increase in volume and value during the last few months of 2019.

During the period of January–April 2020, the export contribution of CPO and derivative products reached 12.4 percent of Indonesia’s total exports of non-oil-gas with a total value of US$6.3 billion. The export performances of palm oil and derivative products also varied in several major export markets. “Despite the fact, we need to watch out the possibility of declining trend of the palm oil export share in our total non-oil-gas exports during the last three months,” added Jerry.

The performance of Indonesia’s palm oil export to Indian market still good in terms of volume and value. The volume of Indonesia’s palm oil exports to India increased by 11.2 percent (YoY) to 1.64 million tons, and its value increased by 55.3 percent (YoY) to US$1.09 billion. In Pakistan, the export value of palm oil also rose significantly by 22.3 percent (YoY) to US$452.7 million, although in terms of volume dropped by 3.0 percent to 691,500 tons.

Conversely, exports to other major markets, such as China and Netherlands, saw a decrease. The palm oil export to China dropped in volume by 54.3 percent (YoY) to 879,000 tons and in value dropped by 48.5 percent (YoY) to US$497.4 million. So did export to Netherlands, which saw a decrease in volume by 27.9 percent (YoY) to 895,400 tons and in value fell by 9.3 percent (YoY) to US$348.3 million.

Deputy Minister Jerry pointed out that to anticipate the decrease of palm oil exports, the Indonesian government has been implementing the program of biodiesel 30 percent (B30), which requires the mixture of 30 percent fatty acid methyl esther (FAME) derived from CPO and 70 percent of diesel fuel. It is also appropriated as part of the strategic step to meet the target of renewable energy sources in the country.

With the B30 program, the local absorption of CPO will increase and will be able to maintain the price at the expected level globally.

Other policy which is expected to maintain the CPO price stability is the policy of export tax of palm oil and derivative products through the finance ministry regulation no.57/PMK.05/2020. The government decided to eliminate the price threshold in export tax mechanism and raise the average export levy by US$5. The export levy is expected to help maintain the development of downstream palm oil industries in the country and to keep its competitiveness in the global market. (*)

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