Lang
Indonesia is accelerating the development of downstream industries in its crude palm oil (CPO) sector as it seeks to strengthen its role in setting global prices for the commodity. Despite being the world's largest producer and consumer of palm oil, key price benchmarks continue to be set at trading hubs in Malaysia and Rotterdam.
Agriculture Minister Andi Amran Sulaiman said the country's dominance in production has not yet translated into pricing power. He noted that a significant share of the palm oil Malaysia exports actually originates in Indonesia, yet international markets and buyers remain the ones setting global price levels.
The government is prioritising the development of biofuel as a key downstream industry. Officials expect biofuel exports to significantly boost palm oil-related revenues, while processed products such as margarine and cooking oil could further enhance export earnings through high value-added production.
Authorities also plan to redirect part of the crude palm oil volumes originally destined for export towards domestic processing. Up to 5 million tonnes of palm oil could be used to produce biodiesel, helping to cut diesel imports and potentially supporting global prices by tightening supply.
Economists point out that expanding downstream industries is essential to accelerating Indonesia's economic growth. Besides palm oil, the government also intends to expand processing of coconut and gambier products to increase the value of agricultural output and create new jobs.