Trade Barriers Blamed for Decline in Palm Oil Exports

The Indonesian Palm Oil Producers Association (GAPKI) has said that crude palm oil (CPO) exports fell significantly in April, as destination countries had started introducing regulations that were prohibitive towards Indonesia’s main export commodity, reports The Jakarta Post on July 16.  Gapki data show that CPO exports in April dropped 18% month-on-month, from 2.96 million MT in March.  Meanwhile, 2.79 million MT of CPO was exported in May, a 14% increase from April figure but nonetheless below expectation.

Gapki executive director, Mukti Sardjono, said that several traditional markets for Indonesian palm oil, like India, had introduced regulations that did not favor the commodity, added that Malaysia currently dominated the Indian palm oil market. Malaysia was able to penetrade the Indian market because of its 2011 Comprehensive Economic Cooperation Agreement (CECA) with India, which offered reduced tariffs of 45% instead of 54%.  Malaysia is the second largest producer of palm oil following after Indonesia.

Mukti has urged the government to accelerate its negotiations for a trade agreement with India to improve competitiveness of Indonesian palm oil and products in that market.  Apart from decline in exports to India, Gapki also recorded a weakening trend in palm oil exports to China and Bangladesh.