The country’s number one export commodity continues to face criticism over sustainability, such as deforestation issues raised by the euro zone, and has been hurt by trade barriers from its major importers, including India.

“The international demands over our palm oil sustainability have become so complex and are no longer purely addressing the sustainability issue itself, so we have to push our campaigning and lobbying efforts [...] and use trade instruments to resolve trade barriers at the international level,” said Joko at a palm oil seminar recently.

He criticized the lack of bilateral trade agreements between Indonesia and major palm oil importers, such as India, the EU, China and Pakistan, which has dented the country’s competitiveness. Indonesia has only a preferential trade agreement with Pakistan and no bilateral agreements with the rest of those countries.

India is the largest market for Indonesia’s palm oil with 6.71 million tons of products exported there in 2018, followed by the EU, China and Pakistan by 4.78 million, 4.41 million and 2.48 million tons, respectively. 

India now imposes a whopping 50 percent import tariff on palm oil products, including those coming from Indonesia. The duties had made the country’s palm oil lose out to competition from Malaysia, which is also one of the largest palm oil exporters in the world, as Kuala Lumpur has inked a trade agreement with New Delhi and enjoys a lower tariff of 45 percent.

The EU, the second largest export market for Indonesia, will impose temporary duties of 8 to 18 percent on biodiesel imports produced by Indonesian companies starting Sept. 6 on allegations that palm oil companies in Indonesia receive various incentives and special subsidies from the government.

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