JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono revealed a number of critical challenges, which are currently haunting the national palm oil industries.
“Those challenges include surging domestic consumption, the threat of declining CPO exports, and the urgency of legal certainty for the sustainability of palm oil investment in Indonesia,” Eddy Martono said during an exclusive interview with CNBC Indonesia, recently.
Importers growingly worried, Pakistan affected the most
The implementation of the mandatory program of biodiesel 50 percent (B50) has now begun to raise serious concerns among the major importers of palm oil from Indonesia. It has increased domestic palm oil consumption, while threatening to cause a decline of palm exports.
Among the importers, Pakistan is one of the most concerned countries. Their dependence on Indonesian CPO supply is so significant that two Pakistani ministers planned to make a visit to Indonesia to meet with GAPKI and discuss future supply guarantees.
Eddy Martono warned that Indonesia must not ignore the loyalty of these loyal purchasing countries.
“Once they have switched to other vegetable oils, it won’t be easy for Indonesia to recapture that market,” Eddy Martono emphasized.
RI’s palm exports threatened to be replaced by other vegetable oils
One of the biggest threats to the Indonesian palm oil industry is intense competition with other vegetable oils in the global market. When CPO prices become too high or Indonesian supplies decrease, purchasing countries could potentially turn to soybean, sunflower, or rapeseed oil as substitutes.
Although Indonesia remains the world’s largest producer and exporter of palm oil, Eddy emphasized that this dominant position cannot be considered permanent without a solid production strategy and price stability.
The risks of high CPO prices
The increase in domestic biodiesel demand has the potential to push CPO prices above US$ 1,300 per ton. While this may seem advantageous for palm oil farmers in the short term, Eddy Martono warned of negative long-term impacts.
If CPO prices are too high, importing countries could cut imports and switch to alternative vegetable oils. Conversely, if production continues to increase while exports decline, domestic stocks will swell and depress domestic palm oil prices.
“Not only farmers, but companies could also be affected if domestic prices are ultimately depressed,” he said.
GAPKI proposes flexible implementation of Biodiesel
To maintain a balance between national energy need and export interests, GAPKI proposes that the biodiesel mandatory program be made more adaptable to global market dynamics.
When exports increase, the biodiesel blend can be lowered to B40 or B35. Conversely, when domestic energy demand increases, the mandatory blend can be raised back to B50.
Eddy cited the example of Brazil, which successfully implemented a flexible scheme for sugar and ethanol production based on market conditions—a model deemed relevant for Indonesia to adapt.
Replanting Program hindered by forest issues
The replanting program for oil palm smallholders’ plantations (PSR) is touted as a key solution to boosting national palm oil productivity. However, this strategic program still faces a major obstacle: much of the smallholders’ oil palm land remains administratively within forest areas.
As a result, millions of smallholders have not been able to access the replanting assistance fund of Rp 60 million per hectare from the plantation fund management board (BPDP). Eddy Martono urged the government to immediately resolve the issue of overlapping forest areas so that the implementation of PSR program can be optimized and national palm oil production continues to increase.
RI’s palm down-streaming reaches positive results
Amidst various challenges facing the palm oil industries, Eddy Martono expressed positive news: Indonesia’s palm oil down-streaming is showing encouraging progress.
Of Indonesia’s total palm oil exports, which were expected to reach approximately 32 million tons by 2025, the export of crude palm oil (CPO) was only less than 3.0 million tons. The rest are in the forms of downstream products and other palm oil derivatives with higher added values.
The success is inextricably linked to the role of the mandatory biodiesel policy and the implementation of export levies, which have encouraged massive investment in the downstream palm oil sector.
Legal certainty: Key to future of RI’s palm oil industries
Despite the bright prospects for the palm oil industry, Eddy Martono emphasized that the biggest challenges that must be addressed immediately are legal certainty and a conducive business climate.
Issues of overlapping forest areas, unclear extensions of Land Use Rights (HGU), and frequently changing regulations are considered to hinder long-term investment in the palm oil plantation sector.
Without adequate regulatory certainty, companies will be hesitant to invest in oil palm plantation expansion or rejuvenation.
Therefore, GAPKI continues to coordinate intensively with the government—including the Indonesian Ministry of Agriculture—to ensure that various issues in the palm oil industry are quickly resolved. The ultimate goal is to ensure that Indonesia remains a strong leader in the global palm oil industry. (*)
Cnbcindonesia.com. Ketum GAPKI Beberkan 7 Ancaman Besar Industri Sawit Indonesia: Ekspor Terancam, Pasar Global Bisa Hilang. https://www.cnbcindonesia.com/news/20260508103521-8-733357/video-pengusaha-minta-pemerintah-permudah-peremajaan-sawit-rakyat. 13 Mei 2026
