Jakarta, CNBC Indonesia – President Joko Widodo (Jokowi) has officially banned the export of crude palm oil (CPO) and cooking oil products. Will Indonesia be at a loss considering that CPO is the mainstay of Indonesia’s exports?
Jokowi revealed the export ban policy after chairing a meeting on meeting the basic needs of the community with the ministers, especially those related to the availability of cooking oil for domestic needs. This ban will take effect on Thursday, April 28.
“At the meeting, I decided that the government would prohibit the export of raw materials for cooking oil and cooking oil,” Jokowi said Friday (22/4/2022).
The former mayor of Solo argued that the export ban was enforced by considering the availability of domestic cooking oil was met. The reason is, some time ago the availability of cooking oil products was scarce in the market.
If CPO exports are completely stopped, it will have an impact on the income earned by Indonesia. Putera Satria Sambijantoro, an economist at Bahana Sekuritas estimates that Indonesia could lose US$ 3 billion or Rp 42.9 trillion without the export tax.
“Every month, CPO and its derivative products contribute USD 3 billion of Indonesian exports, in addition to Rp 4 trillion from export tax revenues,” said Satria.
Even so, Satria said the loss of CPO could still be offset by other commodities and Indonesia’s trade surplus could still be maintained.
Satria also said that the consequences were more serious from trade relations with countries that buy CPO from Indonesia such as China, India, Pakistan and the US. The ban on CPO exports could lead to retaliatory actions related to imports of Indonesian manufactured goods.
The impact of this export ban is not only felt by Indonesia, but also throughout the world. Because Indonesia is the largest producer in the world with a coverage of up to 59% of world production.
On the other hand, demand for CPO could increase from the European region. The reason is that the wars in Russia and Ukraine caused the production of cooking oil such as corn, rapeseed, and soybeans to fail.
If exports are closed, it is very likely that the demand will lead to Malaysia as the world’s second largest producer. Indonesia may lose the opportunity to dominate the European market. Especially considering the dispute between Indonesia and Europe regarding palm products.
However, in Malaysia itself there is a shortage of workers in oil palm plantations, which disrupts oil palm production there. Finally, world supply is threatened not to be able to keep up with demand and will push CPO prices higher.
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