Observer: Palm discrimination is a lesson against export dependence

Observer: Palm discrimination is a lesson against export dependence

Jakarta (ANTARA) - Economist Faisal Basri said Indonesia must learn from the case of discrimination of palm oil and its derivatives by the European Union and reduce its dependence on commodity exports. "We cannot continue to boost our exports," he said in response to ANTARA's  question in Jakarta on Thursday.

Stating that the European market was not the only market for Indonesian palm oil products, the senior economist said India was also a prospective market but decried the high import duty policy in the country, which is up to 50 percent.

Therefore, Basri suggested that instead of boosting palm oil exports to India, it would be better if oil palm entrepreneurs could open palm oil production facilities in the country. "What we have to do is build factories in India and use our products. Our palm oil entrepreneurs are terrific; they can do it," he said.

Another option now being mooted by the government is processing palm oil into biofuels through the B20 and B30 programs, he said, adding that the government was aiming at developing B100, which will completely utilize palm oil as fuel.

Speaking about the claim process with the International Trade Organization (WTO), Faisal said it would take a long time and suggested diplomatic efforts instead. "The process at the WTO is usually long and we almost always lose, starting from the cases of automotive (Timor cars) and agricultural products (horticultural products)," he said.

The European Commission has decided that oil palm cultivation results in excessive deforestation and its use in transportation fuels must be eliminated.

The Commission has also issued a Delegated Regulation Supplementing Directive 2018/2001 of the EU Renewable Energy Directive II. Broadly speaking, the draft will isolate and exclude palm oil from the European Union's biofuel sector so that it can benefit other vegetable oil products.

This has the potential to have a negative impact on the interests of major palm oil producers, such as Indonesia and Malaysia.

The EU move received a strong response from the Indonesian government, one of which was from Vice President Jusuf Kalla, who threatened retaliation if the European Union boycotted Indonesian palm oil products.