After coal, palm oil is also banned… How far is Indonesia’s voluntary nationalism going?


Domestic market supply is the top priority… Strong despite criticism of resource nationalism

(Jakarta = Yonhap News) Correspondent Hyemi Seong = As Indonesia, which is the world’s largest exporter of coal and palm oil and possesses abundant mineral resources such as nickel, has taken a resource-nationalist move with a series of ’embarrassment’, the international community including individual importers is tense.

In particular, the Indonesian government seems to be adhering to ‘My Way’, saying that satisfying the domestic market is the top priority despite criticism that it may have a negative impact on the international market due to price disturbances.

Cooking oil (Minyak goreng) corner of an Indonesian supermarket


President Joko Widodo, presiding over the National Development Plan Deliberation Meeting on the 28th, said, “Indonesia’s economy is showing positive trends, such as expanding the trade surplus despite uncertainty.” Seven guidelines were issued, including the expansion of sector independence.

He directed his cabinet to prepare for a time when the global economic, food and energy crisis continues into next year, in particular.

This suggests that the embargo may be extended to other sectors as well as that these measures may continue for a certain period of time.

President Jokowi’s remarks today are drawing attention as they shocked the international market by indefinitely banning the export of most palm oil products, including palm olein, which is used for cooking oil, as well as palm oil crude oil (CPO).

The Indonesian government stopped exporting edible oil and raw materials from 00:00 on the same day as palm oil producers concentrated on exports due to high international market prices and caused a shortage of edible oil in the domestic market.

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Initially, only palm olein exports were to be halted, but the international market price skyrocketed as it banned the export of palm oil crude oil and RBD palm oil refined, bleached and deodorized (RBD) under President Jokowi’s directive.

As a result, not only food companies such as ramen, confectionery, and chocolate, but also cosmetics, detergents, and biodiesel companies were affected widely.

Coal-loaded barge photographed in East Kalimantan, Borneo
Coal-loaded barge photographed in East Kalimantan, Borneo

[로이터 자료사진, 재판매 및 DB금지]

There is a reaction that Indonesia has poured oil into a situation where inflation is serious due to disruptions in exports such as grain and sunflower seed oil due to the Ukraine war.

Atul Chaturvedi, president of the Indian Solvent Extraction Association (SEA), criticized Indonesia’s ban on palm oil exports, saying it would bring inflation to everyone.

“The move is one of the biggest agri-nationalisms in the face of soaring food prices,” said Tobin Gorray, agri-commodities strategist at Commonwealth Bank Australia.

Despite the negative reaction, President Jokowi said, “It is ironic that there is a shortage of cooking oil in the world’s largest palm oil producer.”

In January of this year, President Jokowi banned all coal exports for a month as coal producers concentrated on exports due to rising international prices and were in danger of building some power plants by violating their domestic market supply obligations.

At that time, about 100 ships already loaded with coal or to be shipped were floating off the coast of Indonesia, and they appealed for the obligation to pay compensation for damages due to delay in contract fulfillment, but there was no response.

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This time, the authorities also stopped exporting palm oil and deployed naval vessels to major export ports, and on the 27th, the day before the embargo was implemented, two ships carrying palm oil and departing for India and the United Arab Emirates, respectively, were seized for lack of documentation.

President Jokowi not only banned the export of nickel ore at the end of 2019, then stopped exporting major minerals one after another, and is operating an operation to attract foreign companies to Indonesia that will process ore into high value-added products.

On January 10, he said, “We will also ban exports of bauxite this year and copper ore next year.”

In response to Indonesia’s policy of prioritizing the domestic market and creating high added value, raw material importing countries are trying to diversify their import sources, but Indonesia’s production of coal, palm oil, and major minerals is overwhelmingly difficult, so it is not easy.

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2022/04/28 17:43 Send


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