Indonesia’s palm oil banned from Europe, IPOA targets new export market

This article has been translated by PwC Indonesia as part of our Plantation News Highlights service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - Sawit RI dilarang masuk Eropa, Gapki incar pasar baru ekspor

By: Ridho Syukra

Jakarta - The Indonesian Palm Oil Association (IPOA) is preparing a strategy to find new export markets as palm oil from Indonesia is banned from entering the European Union due to the European Union Deforestation-Free Regulation (EUDR). 

IPOA Head Eddy Martono said that business players and the government are currently striving to open new markets, the latest being Eastern European countries. 

“[We] hope that [we] will not continue to depend on the traditional markets, but the existing traditional markets will be maintained,” said Eddy to Investor Daily in Jakarta on Tuesday (13/6). 

Eddy said that the government anticipated the EUDR through a 3-year palm oil moratorium, namely Presidential Instruction No. 8/2018 concerning the Postponement and Evaluation of Permits for Oil Palm Plantations and Increasing the Productivity of Oil Palm Plantations, which ended on 19 September 2021. 

With this policy, according to Eddy, no palm oil companies have cleared new land since 2020 due to the absence of permit. However, the case is different with smallholders, especially those who shifted from rubber or other commodities to palm oil. 

The Council of Palm Oil Producing Countries (CPOPC) together with Indonesia and Malaysia made a visit to Brussels, Belgium, on 30 and 31 May 2023. 

It was intended to express concerns and objections to the implementation of the EUDR, a law regulating trade of deforestation-free commodities that was announced by the European Union in December 2022. 

The meeting was held in a cordial, straightforward, and open manner, reaffirming the importance of the palm oil commodity for the economy and welfare of the people in the two countries. 

The visit was received by the European Green Deal Executive Vice President (EVP) Frans Timmermans, Commissioner for Climate Action Policy, Josep Borrell-Fontelles, High Representative of the European Union for Foreign Affairs and Security Policy, Virginijus Sinkevičius, Commissioner for Environment, Oceans, and Fisheries, Member of the European Parliament (MEP) Heidi Hautala, Vice President of the European Parliament, and MEP Bernd Lange, Chair of International Trade (INTA). 

The CPOPC delegation highlighted the impact of the EUDR on the value chain and consistently emphasised the need for the EU to engage with the producing countries at a working and technical level. There is also a need for the establishment of a consultative agreement by both parties to discuss the ways and means of its implementation. 

Issues to be resolved include the inclusion of smallholders in the supply chain, national acceptance of sustainable certification schemes as a reference for the guideline implementation, technical clarification of comparison system, geolocation, legality, and traceability. 

Indonesia and Malaysia view the EUDR as inherently discriminatory and punitive, which will not only cause detrimental effects on international trade but will also hinder the palm oil industry’s efforts to achieve the 2030 Agenda for Sustainable Development Goals (SDGs). 

The two countries expressed their hope that the EU would adhere to the principles of transparency, non-discrimination, consistent with World Trade Organisation (WTO) rules and regulations, particularly in the trade of palm oil and its products. Indonesia and Malaysia believe that the EUDR should not create discriminatory trade distortions in terms of product coverage and national treatment. As developing countries continue to engage in building a sustainable multilateral trading system, it is imperative that new regulations be achieved through a balanced, inclusive, deliberate, and non-trade approach. 

This mission was jointly led by Deputy Prime Minister and Minister of Plantation and Commodities of Malaysia Dato’ Sri Haji Fadillah bin Haji Yusof and Coordinating Minister for Economic Affairs of the Republic of Indonesia Airlangga Hartarto as a follow-up to decisions made at the CPOPC Bilateral Ministerial Meeting held on 9 February 2023 in Jakarta, Indonesia. 

This joint mission is expected to receive a positive response to the above issues and concerns, especially the establishment of a joint task force. The two leaders reaffirmed the serious need for this issue to be resolved given the consequences.