Indonesia’s palm oil production and exports are expected to grow this year thanks to strong demand from India and China despite lingering economic uncertainty in the US and Europe, an association says.
Indonesian Palm Oil Producers Association (Gapki) marketing head Susanto said on Wednesday that output could rise 6.4 percent to 25 million metric tons this year, while exports could increase to 17.5 million to 18 million tons this year from last year’s estimated 16 million tons.
“Demand for palm oil from China and India, our main markets, is still high, although demand from Europe will be stagnant this year,” he told a press conference at the association office in Jakarta.
Susanto said demand from China and India would increase by between 4 and 5 percent this year compared to last year.
However, this year’s palm oil export projection to China this year was below the 21 percent increase to 2.9 million tons in 2011.
The forecast for palm oil shipment to India this year was better this year because in 2010 and 2011 exports to India were relatively unchanged at 5.7 million tons. The data also showed that from 2010 to 2011, palm oil export to Europe rose from 3.5 million tons to 3.7 million tons.
“This year’s export to Europe will be around 3.5 million tons and 3.6 million tons,” Susanto said.
Gapki also anticipated a huge demand for palm oil from Pakistan, especially after Indonesia signed a preferential trade agreement (PTA) with the country in September last year.
“We predict that the palm oil export to Pakistan may reach 800,000 tons this year from last year’s estimated 220,000 tons, Susanto said.
He said that the PTA had permitted Indonesia to pay a zero-percent import duty upon entering Pakistan. Before the PTA signing, Indonesia had to pay a 10 percent import duty.
Before 2007, Indonesia was the largest exporter of palm oil to Pakistan at around US$560 million.
But in 2007, Malaysia started surpassing Indonesia’s palm oil export to Pakistan following the Malaysia-Pakistan PTA signing in 2007.