TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Govt told to retaliate against new EU tariffs
Indonesian biodiesel and palm oil producers are pressuring the government to be up in arms following the European Union’s five-year biodiesel tariffs, which took effect on Monday
Change Size
I
span>Indonesian biodiesel and palm oil producers are pressuring the government to be up in arms following the European Union’s five-year biodiesel tariffs, which took effect on Monday.
Indonesian Biofuel Producers Association (Aprobi) chairman Master Parulian Tumanggor said the industry group would push the government to file an objection against the duties with the World Trade Organization.
The industry group is “extremely disappointed” with the new tariffs, calling the EU’s accusations of Indonesian government biodiesel subsidies “completely false”, said Master.
“We will fight for it, whether it is through the EU court or the WTO,” Aprobi cochairman Paulus Tjakrawan told The Jakarta Post.
The EU duties, which will remain in place for five years, range from 8 to 18 percent for Indonesian exporters of biofuel made from vegetable oils and animal fats, the European Commission said.
The new measure follows the European Commission’s findings that Indonesian producers sold biodiesel at unfairly low prices due to government grants, tax exemptions and access to raw materials below market prices.
The Trade Ministry's director for trade security, Pradnyawati, said the ministry would scrutinize the EU's biodiesel tariffs and coordinate with affected industries to decide its next step.
"The possible steps vary from appealing the decision at the EU's local courts [...] to challenging the EU at the WTO-DSB," Pradnyawati said, referring to the WTO dispute settlement body.
The commission's findings specifically point to trade-distorting government aid to Ciliandra Perkasa, Wilmar Group, Musim Mas Group and Permata Group, through the Indonesian Oil Palm Estate Fund (BPDP-KS) and export financing from Indonesia Eximbank.
Musim Mas senior manager Togar Sitanggang declined to comment on the issue when contacted by the Post.
Master, who is also a commissioner at Wilmar Group, said “not a single rupiah” had been disbursed from the state budget to subsidize the industry.
“The EU has investigated Indonesia but it remains adamant that funds from the BPDP-KS are categorized as government subsidy,” said the Aprobi chairman.
The BPDP-KS, he explained, pooled funds from CPO exporters’ export levies to cover differences between the prices of biodiesels that were sold to state-owned oil and gas holding company Pertamina and international prices.
Master said the fund aimed to stabilize supply and demand as the government implemented 20 percent blended biodiesel (B20) throughout 2019 and would introduce B30 starting from January next year.
“[...] so that there’s balance in supply and demand to avoid [drastic] drops in palm oil prices that would jeopardize farmers’ income,” he added.
Imports from Indonesia account for 400 million euro (US$ 443.70 million) of the EU’s overall 9 billion euro biodiesel market, according to the commission, which coordinates trade policy for the European bloc.
The European Biodiesel Board, which represents 32 percent of total EU biodiesel production, lodged the initial complaint in October 2018 as Indonesian biodiesel is considered to be driving EU producers into losses.
Indonesian exporters’ combined share of the EU biodiesel market leaped to 3.3 percent, or 516,088 metric tons, in the 12 months through September 2018 compared to 0.2 percent in 2017 and 0.3 percent in 2016, according to the commission.
Indonesian Oil Palm Association (GAPKI) secretary-general Kanya Lakshmi Sidarta said the EU’s high tarrifs could be “deadly” for the country’s palm oil sector.
The EU was the second-largest palm oil export destination for Indonesia in 2018, with demand reaching 4.78 million tons, according to GAPKI data. India is the largest export destination for Indonesian palm oil and China is the third-largest.
Palm oil, a top plantation contributor for tropical Indonesia, is a significant foreign exchange revenue generator for the country and has contributed 1.5 to 2.5 percent to gross domestic product. Smallholder oil palm farmers account for more than 3 million hectares of land in the country.
The trade spat further flares the prolonged feud between the two trading partners. Last year, the EU planned to phase out the use of palm oil by 2030 as it considers the commodity to be a high-risk vegetable oil that has caused deforestation.
Indonesia and the EU were also embroiled in a new quarrel last month following the bloc’s complaint to the WTO over Indonesia’s nickel export ban and alleged illegal subsidies.
