Palm oil exports dented by regulations in destination nations

Palm oil exports dented by regulations in destination nations

Trucks transported palm oil fruit in the PTPN VI plantation in Sariak, West Pasaman of West Sumatra. (Illust./ANTARA/Iggoy el Fitra/kye/am

Jakarta (ANTARA) - The Indonesian Palm Oil Association (Gapki) pointed to a decline in Indonesia's palm oil exports, pressured by unfavorable regulations in some export destination countries,.

The exports of Indonesian palm oil, including crude palm oil (CPO) and its derivatives, oleochemical, and biodiesel in April, declined 18 percent to reach 2.44 million tons as compared to the total exports of 2.96 million tons in March, according to the association's data released here on Monday

"In May, exports had clocked an increase but yet not surpassing our expectations," Gapki's Executive Director, Mukti Sardjono, pointed out.

Some 2.79 million tons of palm oil were exported in May, or a 14 percent rise as compared to the previous month.

The export of CPO and its derivatives in April had declined 27 percent, to  2.01 million tons from 2.76 million tons in March0, and it increased 18 percent to reach 2.40 million tons in May.

Some main export destination countries have imposed regulations that can be categorized as trade barriers. For instance, India that has increased export duty on palm oil for an uncertain period.

Related news: Indonesia firms opposes palm oil discrimination in the EU

Sardjono noted that the sluggish export of Indonesian palm oil has become a "homework" for the country's industry.

Malaysia, the second-largest palm oil producer, acted promptly to deal with India's regulation by inking a Comprehensive Economic Cooperation Agreement (CECA) in 2011.

It was then followed by negotiations on the Free Trade Agreement (FTA) that had resulted in a big discount for import duty on refined products. Import duty on refined products from Malaysia was reduced, from 54 percent to 45 percent, lower than the import duty imposed for Indonesian products.

Consequently, the Indian palm oil market is dominated by Malaysia, while Indonesia's exports continued to drop.

Mukti is upbeat about the government intensifying economic cooperation with India.

In the meantime, the adoption of the Delegated Act RED II in March in the European Union has resulted in a negative sentiment toward Indonesian palm oil in Europe.

According to Gapki, the export of CPO and its derivatives to Europe has continued to decline. Exports in April declined 37 percent as compared to March, and it declined further by four percent in May.

Exports in March reached 498.24 thousand tons, followed by 315.24 thousand tons in April, and 302.16 thousand tons in May.

Similarly, exports to China that had recorded an increase, from 353.46 thousand tons in March to 499.57 thousand tons in April, declined 18 percent to 410.56 thousand tons in May.

The association has also recorded a lower export of palm oil to Bangladesh. Related news: Government to protect 16 million palm oil industry workers

Related news: House calls for special law on oil palm


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