Govt To Counter EU’s Palm Oil Unfairness With New Strategy

Jakarta – The Indonesian government is trying to maintain its palm oil export market in European Union (EU) by applying a new strategy. Together with other Southeast Asian countries, Indonesia will apply the new strategy through the ASEAN-EU Joint Working Group to discuss about vegetable oils with the European countries.

The foreign ministry’s expert staff in economic diplomacy, Ina Hagniningtyas Krinasmurthi said that the new strategy is expected to prevent the EU from discriminating the palm oil commodity.

“We want to see that the palm oil is fairly treated with the same standard applied to other vegetable oils,” she told Tempo on Sunday, 20 December 2020.

She said that in the forum they will discuss the treatment on the palm oil based on the sustainable development goals (SDGs), which were agreed by 193 member countries of the United Nations (UN) in September 2015. The SDGs are aimed to implement the three principles of economy, social and environment. “The EU should not only see the palm oil from the perspective of environment alone, as it is also concerned with the economic and social issues. The palm oil industry provides job opportunities for 26 million people. More than 40 percent of Indonesian oil palm plantations are owned by smallholders,” she said.

The head of agro-products sub-directorate at the trade ministry, Donny Tamtama noted that there are many obstacles facing the palm oil commodity in the EU market. One of the obstacles is the Renewable Energy Directive (RED) II. Based on this policy, the EU has concluded that the palm oil caused deforestation and it has decided to phase out the use of palm oil as raw material for biofuel in stages until zero use in 2030.

“Together with lawyers and a number of experts, we are preparing lawsuit documents that we will file to the World Trade Organization (WTO) early next year,” said Donny.

Another obstacle is the import tariff against the biofuel products at 8-18 percent. In France, the tax incentive for biofuel has been totally eliminated.

In Britain, its government has applied a due diligence system to trace the source of palm oil production. “Indonesia is also dealing with the problem of palm oil-free labels in food products in retailing stores in Europe,” said Donny.

Besides taking the legal action, the Indonesian government and the palm oil stakeholders have also launched positive campaigns on the palm oil production, particularly through the social media abroad. “In the meantime, we are also pursuing efforts of improving the palm oil industry at home,” added Donny.

The economic coordinating ministry’s Deputy in charge of food and agriculture coordination, Musdalifah Mahmud said that the government has issued a number of regulations to improve the sustainability of palm oil industry. She said that the government is now trying to settle the problems of forest encroachment in several oil palm plantations. “Last year, the government found that 3.4 million hectares of the total 16.3 million hectares of oil palm plantations are located in the forest areas. “We’re also continually improving our system of the Indonesian Sustainable Palm Oil (ISPO),” she said.

Despite obstacles in EU, the Indonesian government has no plan to stop palm oil exports to EU due to its market potential. In 2019, the EU is the third largest export destination for Indonesia’s palm oil products after India and China. Palm oil import accounts for around 62 percent of EU’s total imports of vegetable oils in 2019.

But Indonesia has been continually trying to open new markets for the palm oil.  “In every appointment of new ambassador, one important task that has been asked is the global promotion of palm oil. One of the potential markets is in Africa,” said Musdalifah. (*)

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