Great! Indonesia-Malaysia Ready to Export Palm Oil to China

“We agreed to collaborate to encourage China to use B5, which will in turn reduce trade deficit with Indonesia and Malaysia and support environmentally friendly energy,” said Indonesia's Ministry of Industry Airlangga Hartarto after attending a meeting with Malaysia's Minister of Plantation Industries and Commodities, Datuk Seri Mah Siew Keong, in Putrajaya, Malaysia.

The Minister of Industry expects that China's use of biodiesel will be a potential market for increasing Indonesian palm oil exports. It could even become an opportunity for national industry players to invest in building biodiesel factories. “Palm oil is one of Indonesia's and Malaysia's strategic commodities. The success or failure of this commodity rests in the hands of both countries as suppliers of 90 percent of CPO to the global market,” he said.

Therefore, the Indonesian Ministry of Industry focuses on encouraging the development of the domestic CPO industry through downstream processing, which will increase high added value. “Indonesia produced around 35 million tons of CPO in 2016. Development of the downstream industry in palm oil processing includes products such as palm oil cooking oil, oleofood, oleochemicals, and even biofuel,” explained Airlangga.

In 2016, the national production capacity for cooking oil reached 45 million tons per year, oleofood 2.5 million tons per year, oleochemicals 3.5 million tons per year, and biodiesel 10.75 million tons per year. Meanwhile, exports of CPO and its derivative products reached USD4.1 million from January to February 2017, an increase of 63 percent compared to the same period in 2016.

Airlangga continued by saying that in the bilateral meeting, both parties also agreed to strengthen the institutional framework for the Council of Palm Oil Producing Countries (CPOPC). “We encourage this institution to leverage added value or downstream industries in the CPO industry,” he said.

The CPOPC will invite seven other countries to join as CPO producers: Thailand, Colombia, Nigeria, Papua New Guinea, Ivory Coast, Honduras, and Guatemala. “We also invited them to attend the FGD, which will be held soon in Bali,” Airlangga added. The inclusion of those countries is expected to have a positive impact on the global CPO commodity.