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Jakarta Post

Amid trade spat with EU, Indonesia’s palm oil finds silver lining in biofuel, China 

  • Marchio Irfan Gorbiano and Rachmadea Aisyah

    The Jakarta Post

Jakarta   /   Tue, August 13, 2019   /  05:18 pm
The Jakarta Post Image
A worker gathers oil palm fruit bunches at a plantation in Lampung. Indonesia and Malaysia, the first- and second-largest palm oil producers, have threatened to challenge the European Union via the World Trade Organization if the EU continues to phase out palm oil from transportation fuel.(The Jakarta Post/R. Berto Wedhatama)

As Indonesia, the world’s top palm oil producer and exporter, commits to fighting the European Union’s (EU) ban on the use of palm oil for its member countries’ biodiesel, it may find solace near home. President Joko “Jokowi” Widodo has asked stakeholders to speed up the mandatory proportion of diesel blended with crude palm oil (CPO) from 20 (B20) to 30 percent (B30) by January next year, and 50 percent (B50) by the end of 2020, hence pushing up the domestic use of palm oil. Coincidentally, China will remove import tariffs for palm oil in a move that will open up new markets for Indonesian palm oil. “We need to anticipate pressures on CPO [by driving up] domestic demand and so that we can have good bargaining positions, whether with the European Union or other parties that try to weaken our bargaining positi...