Indonesia's Palm Oil Export Ban To Benefit Malaysia

Indonesia’s palm oil export ban announced earlier this month has left the door open for Malaysia to swoop in and expand its market share – but this will depend very much on contract timings and labor viability, say industry experts, Pearly Neo reported for FoodNavigator-Asia.com.

Photo Insert: Indonesian palm oil exports make up over 70% of the global palm oil supply, and experts say that this move to secure local demand is partly due to its high importance as a household commodity.

Indonesian President Joko Widodo surprised the palm oil sector earlier this month when he announced a total export ban on all palm oil, both crude and refined/processed, out of the country to tackle local price hikes.

“The Indonesian people’s need for affordable food takes precedence over revenue and economic concerns right now – once domestic needs have been met, I will of course lift the export ban,” Widodo said.

“I know that Indonesia needs the taxes [and] trade [to sustain the economy], but right now meeting basic local needs is a more important priority.”

Widodo’s aim is to raise local supply and drop prices to a more affordable 14,000 rupiah ($0.97) per liter of palm oil, as compared to the current sky-high rates of 20,000 rupiahs ($1.38) or more per liter.

Indonesian palm oil exports make up over 70% of the global palm oil supply, and experts say that this move to secure local demand is partly due to its high importance as a household commodity.

“It would be difficult for markets in the west to understand just how important the price of edible oil is to a market like Indonesia where it makes up a large component of household spending, and just how much a price hike which might seem small would affect them,” commodity and trade consultancy firm Article Three Trade Policy Director and palm oil industry expert Khalil Hegarty told FoodNavigator-Asia.

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