Anticipating EUDR: RI rounds up support from the Netherlands

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Bisnis Indonesia - Antisipasi EUDR: RI galang dukungan Belanda

,28 August 2023

By: Afiffah Rahmah Nurdifa & Dwi Rachmawati

Jakarta - Indonesia is asking for support from the Netherlands to counter the impact of the implementation of the European Union Deforestation-Free Regulation (EUDR) on Indonesia. 

Trade Minister Zulkifli Hasan (Zulhas) said the EUDR risks hampering exports of Indonesia’s main plantation products, such as palm oil, coffee, rubber, and wood. 

“We are asking for support from the Dutch government to minimise obstacles for Indonesian products that have met the sustainability aspect to enter the European Union,” said Zulhas in a statement as cited on Saturday (27/8). 

Zulhas previously said that the Indonesian government would invite several countries to oppose the implementation of EUDR (Bisnis.com, 14/7). He considered the European Union’s policy to be discriminatory. 

“We will fight back. [We will] negotiate, fight back, certainly inviting countries that have common interests [with Indonesia], such as Malaysia, for example,” said Zulhas. 

In his meeting with the Minister of Foreign Trade and Development Cooperation of the Netherlands Liesje Schreinemacher in between events of the G20 Trade and Investment Ministerial Meeting (TIMM) in Jaipur, India, last week, Zulhas also encouraged the completion of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA) negotiations in 2024. 

Zulhas, who is also the Chairperson of Partai Amanat Nasional (PAN), also hopes that the Dutch government can push for the completion of the IEU CEPA. The Netherlands is Indonesia’s largest export destination in the European Union. The comprehensive trade agreement is expected to increase benefits for business players in both countries. 

Data from Statistics Indonesia (SI) shows that the value of Indonesia’s trade with the Netherlands in the first half of 2023 was recorded at US$2.35 billion. Of this value, Indonesia’s exports to the Netherlands reached US$1.87 billion, while Indonesia’s imports from the Netherlands amounted to US$484.9 million. 

“In accordance with the mandate, the negotiating team will work towards an immediate conclusion of the negotiations,” said Zulhas. 

Inconsistent

On the other hand, the EU’s measures are considered inconsistent with the massive investment in food crops, including palm oil in Indonesia.

Head of the Research Team at the Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI), Eugenia Mardanugraha, explained that data from the Indonesia Investment Coordinating Board (BPKM) shows that European Union countries actually invest the most in the food crops plantation and livestock (TPPP) sector. 

“European Union countries are implementing all sorts of regulations and pressure [EUDR], but we can see from the data how these countries invest in our country,” she said. 

Although she did not explain the palm oil sector in detail, Eugenia believes that palm oil products are a priority commodity to target, considering that Indonesia is the world’s largest producer of palm oil. 

LPEM FEB UI data shows that Belgium is the European Union country that invested the most in the TPPP sector, namely US$41.8 million or 57.2% of Belgium’s total investment in Indonesia of US$73.1 million. 

“Belgium is the EU country with the most investment in plantations in 2022. Unfortunately, this data is not detailed as far as oil palm plantations are concerned,” she said. 

Behind it, Austria invested US$8.1 million in TPPP or 12.1% of its total investment in Indonesia of US$67.3 million. 

Then, Luxembourg invested US$7 million in the TPPP industry or 10% of its total investment of US$64.4 million. 

The Netherlands also invested US$2.9 million or 0.2% of the Netherlands’ total investment in Indonesia of US$1.2 billion. 

Another European Union country participating in TPPP investment is Slovenia with a value of US$1.5 million or 42.2% of its total investment of US$3.7 million. Slovenia is a small country with a quite large percentage of TPPP investment in Indonesia. 

“The Netherlands controls the palm oil exchange and has made huge profits from palm oil trading services,” she said. 

The European Union’s investment measures in this sector are contrary to the EUDR and several negative campaigns against Indonesian palm oil. 

Eugenia suspects that there is a deceptive strategy carried out by the European Union. Of the 27 European Union countries, she believes that each country plays a role in investing in oil palm plantations and controlling the commodity market. 

“In implementing EUDR and all sorts of measures, they may have been dividing up the tasks,” she said. 

The Netherlands has a major role in international palm oil trade, even though the country is not a palm oil producer. The existence of the palm oil exchange in Rotterdam, the Netherlands, strengthens commodity trading which has a strong influence in determining international palm oil reference prices.