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Common ground

KUALA LUMPUR: INDONESIA Palm Oil Board (IPOB) or Dewan Minyak Sawit Indonesia, the umbrella body of Indonesia’s palm oil sector, wants to join hands with Malaysia to fight smear campaigns that intend “to kill the growth of oil palm plantings.”

As a step towards this initiative, IPOB, provided it gets government approval, wants to follow Malaysia’s example of establishing a dedicated funding to promote benefits of oil palm planting and create better awareness on palm oil nutrition.

“We want to promote Indonesia’s palm oil industry on a global level. We have the same spirit as Malaysia in opening up markets that are increasingly hindered by non-tariff trade barriers and protectionism,” said IPOB chairman Derom Bangun.

Oil palm planting and palm oil exports provide developing nations a path out of poverty. The growing of oil palms, the world’s most-efficient oil crop, is helping the people of Malaysia and Indonesia to improve their standard of living. 

Indonesia and Malaysia supply affordable and nutritious cooking oil and margarine to billions of people in developing nations such as China, India, Pakistan, Bangladesh and Vietnam. 

According to Oil World trade journal, Malaysia and Indonesia are expected to export the bulk of the 56 million tonnes of palm oil traded worldwide this year. In the last five years, Malaysia earned between US$15 billion and US$20 billion (RM50 billion and RM70 billion) a year from palm oil exports.

Indonesia earns around US$15 billion annually from palm oil shipments. 

“Our palm oil promotional diplomacy and market access advocacy are done on an ad hoc basis currently,” Derom told Business Times on the sidelines of the Oils & Fats Congress 2014 held here recently. 

“We’re seeking a meeting with Agriculture Minister Andi Amran Sulaiman on this matter, among other things. 

“We hope that by formalising a dedicated funding mechanism sourced from oil palm plantations and small planters in Indonesia, we can drive these programmes more effectively with Malaysia in the international market,” he said. 

Derom was responding to Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron’s suggestion recently that Malaysia is looking to Indonesia in jointly tackling smear campaigns and barriers to palm oil trade. 

Derom said insidious smear campaigns on palm oil has one clear objective, which is to kill the growth of oil palm planting and reduce consumption in the global market. “Deliberately reducing consumption of palm oil will only harm our farmers’ livelihoods and our means of getting out of poverty. We must address this unfair discrimination and trade oppression more effectively,” he said.

A week later, Hasyim Widhiarto of  The Jakarta Post wrote about President Jokowi’s handling of barriers to palm oil trade.

Indonesia asks EU to ease barriers on palm oil imports

Indonesia, the world’s largest producer of palm oil, has asked the European Union to ease import barriers on palm oil imports, mainly to help open market access for Indonesian farmers. 

In a meeting with the European Council president, Herman van Rompuy, on Wednesday at the State Palace, President Joko “Jokowi” Widodo personally asked the EU’s principal representative to ease the barriers to palm oil products in Europe.

“We have asked him to help us solve this problem,” Jokowi told reporters after his 30-minute closed-door meeting with the former Belgian prime minister. 

“Oil palm plantations belong not only to big companies. About 45 per cent belong to farmers, so it is necessary to find a solution.”

Palm oil is the second-top contributor to total exports in Indonesia, after coal. It contributed US$19.22 billion, or 10.53 per cent, to the country’s total exports of US$182.57 billion last year.

The Indonesian Palm Oil Producers Association (or Gabungan Pengusaha Kelapa Sawit Indonesia) announced Indonesia produced 31.5 million tonnes of crude palm oil (CPO) this year, of which nine million tonnes is consumed locally and the remainder shipped overseas.

Indonesia’s largest market for CPO is India, accounting for 20 per cent of total exports, followed by the EU countries at 19 per cent and China at 15 per cent. 

The Indonesian Palm Oil Board (or Dewan Minyak Sawit Indonesia) said there had been ‘black campaigns’ in Europe to reduce palm oil consumption. Oil palm planters have had to endure false allegations of massive deforestation, land grabbing and lies about orangutan killings hurled by green activists. 

Half truths about palm oil, being high in saturated fats, are also being wrongly blamed as causing artery-clogging diseases such as heart attacks and stroke.

The anti-palm oil sentiment is already evident, especially in France where some food manufacturers already put defamatory “no palm oil” label on their products.

Indonesia, the world’s largest producer of palm oil, the raw material used for biodiesel, suffers from recurring defamatory allegations from trading partners in the EU.

Von Rompuy said that he would take Indonesia’s request as “the council’s concern”, according to Foreign Minister Retno LP Marsudi, who accompanied Jokowi during the meeting. 

The EU is Indonesia’s third largest trading partner and the second largest foreign investor after Japan. 

In his written statement, Van Rompuy said there was still “vast untapped potential” for economic relations between the EU and its Southeast Asian partner. 

“The EU looks forward to engaging with the new Indonesian government in negotiations on an ambitious Comprehensive Economic Partnership Agreement. This would give a boost to bilateral trade and investment and create prosperity and jobs in both Indonesia and the EU,” he said. 

Van Rompuy also applauded Indonesia’s commitment to the settlement of international conflicts through peaceful means.

“In this context, I underlined the need to achieve a lasting ceasefire in Ukraine with full implantation [especially by Russia] of the Minsk agreements, as well as the need to step up international efforts to prevent the spread of extremism and terrorism,” he said.

“Indonesia is playing an important role on both fronts. It has supported Ukraine’s sovereignty and territorial integrity. It has also clearly condemned the barbaric acts committed in Syria and Iraq under the false invocation of Islam.”

Van Rompuy, who took office in 2009, will step down from his current position by the end of November 2014. He will be succeeded by former Polish prime minister Donald Tusk.

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