RI takes a persuasive approach against discrimination trends in palm oil

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 - RI tempuh cara persuasif adang tren diskriminasi sawit

9 June 2023

By: Ridho Syukra

Jakarta - The Indonesian government will take a persuasive approach through bilateral relations between countries to counter the trend of discrimination against palm oil after the implementation of the European Union Deforestation-Free Regulation (EUDR). This is mainly carried out with member countries of the European Union (EU) that have been purchasing Indonesia’s palm oil. The adoption of the EUDR seems to justify the tagline portraying oil palm as a crop with a high risk of deforestation. There is a concern that such a situation will not only trigger a trend of discrimination against palm oil in the EU, but also outside the region. 

According to Achmad Maulizal Sutawijaya, Head of the Corporate Division of the Oil Palm Plantation Fund Management Agency (BPDPKS), the national palm oil industry is facing various challenges, including the EUDR. For this reason, to support the national palm oil industry in the future, the government through the BPDPKS will establish four foundations in carrying out a communication strategy for the EU region, namely legal actions, bilateral relationships, certification, and media coverage. “Bilateral relationships are established as a persuasive effort between countries to suppress the trend of discrimination against palm oil in EU countries,” said Maulizal in Jakarta on Thursday (08/06/2023). 

Meanwhile, legal actions are measures to resolve discrimination issues related to the Indonesian palm oil trade, and certification is a strategy to implement internationally recognised sustainability certification to penetrate the export market. “The role of the BPDPKS in addressing the EUDR challenge includes the media coverage strategy, by utilising the most trusted communication channels in three countries, namely Germany, France and Belgium,” said Maulizal. 

In fact, palm oil producing countries still have a bargaining position because the demand for domestic consumption of vegetable oil in the EU has not been fulfilled and is supplied by vegetable oil importing countries. Previously, the increasing demand for biodiesel fuel in the EU was an opportunity for palm oil to continue penetrating the market. “But with the EUDR implementation this year, palm oil biodiesel producers in Indonesia need to improve the sustainability aspect of their supply chain, so that their market share of the raw material for the biodiesel industry in the EU does not decrease,” said Maulizal. 

Palm oil practitioner Edi Suhardi added that the EUDR policy would raise concerns regarding sustainability in the palm oil industry. Therefore, it calls for compromises on fair trade, trade barriers and protectionism, and poverty alleviation. Admitted or not, the sustainability of palm oil has become a necessity with various standards and systems, definitions and criteria for sustainability that will continue to evolve. “The farmers only need to determine their position and platform for sustainability commitments, will they undertake a more progressive or traditional process,” explained Edi. 

On the other hand, it is necessary to recognise market diversity and multi-tier sustainability standards and build a palm oil coalition to resist attempts to create a single market sustainability norm. Going forward, it is also necessary to build a balanced new commitment to sustainability, especially since the EU is not the only standard setter for sustainable palm oil. The EU market will remain a potential market with strict standards. “The deforestation-free and sustainability label will not affect Indonesian palm oil export to the EU, the market will continue to adapt. However, it will affect independent smallholders,” said Edi. 

Meanwhile, Head of the Secretariat of the Indonesian Sustainable Oil Palm Farmers Forum (Fortasbi) Rukaiyah Rafiq said that implementing sustainable palm oil practices for independent smallholders is generally not impossible. “Only that the process is still facing various obstacles. Evidently, until now, the plantation area of independent smallholders remains very small, around 2% of the total national oil palm plantation area,” he said.

Together with Malaysia 

During his visit to Malaysia, President of Indonesia Joko Widodo (Jokowi) invited Prime Minister of Malaysia Anwar Ibrahim to strengthen collaboration between the two countries in facing various discriminations against palm oil. “I really appreciate the Indonesia-Malaysia joint mission to Brussels that was launched recently, and this kind of collaboration must continue to be strengthened. Do not let commodities produced by Malaysia and Indonesia be discriminated against in other countries,” said Jokowi as reported by the Cabinet Secretariat’s official website on the same day. 

A joint mission between Indonesia and Malaysia was launched from 30-31 May 2023 to express concern over the EUDR which could harm oil palm smallholders in both countries. 

Previously, Head of the Central Executive Board of the Indonesian Oil Palm Farmers Association (Apkasindo) Gulat ME Manurung was concerned that the EUDR implementation would justify the EU’s tagline that portrays palm oil as a crop with a high risk of deforestation, and that it would later be used by other countries outside the EU and non-governmental organisations (NGOs) to suppress palm oil again, especially from Indonesia. “For this reason, we ask for the EUDR to be repealed. Otherwise, the oil palm farmers will file a dispute against the EU to the international court,” said Gulat.