Indonesia-China ink $2.6b CPO, fishery trade agreements

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.

The Jakarta Post

15 November 2022

By: Vincent Fabian Thomas

China has signed a US$2.6 billion worth of commitment to purchase crude palm oil (CPO) and its derivative products from Indonesia, allowing the archipelagic country to secure a trade boost from its number-one trading partner amid global recession.

The sum covers a total of 2.5 million tonnes of CPO and some derivative products, involving deals between nine Indonesian firms and 13 buyers.

"The signing today is a follow-up on a bilateral meeting between the two countries at the end of July, which underlines China's commitment to purchase 1 million tonnes of Indonesian CPO and some fishery products," Indonesian Trade Minister Zulkifli Hasan said in a statement on Friday.

The commitment was the first of its kind in months after Indonesia fell into a palm oil crisis despite being the world's top producer, which prompted the government to ban exports to secure CPO supply for domestic markets and bring down the cooking oil price.

Months after lifting the ban, the country found itself facing another problem: Having difficulties selling it abroad, resulting in oversupply and plummeting prices in local markets, which then was followed by efforts to flush the goods to the international market.

Four local associations the Indonesian Oil Palm Association (GAPKI), the Indonesian Vegetable Oil Refiners Association (GIMNI), the Association of Indonesian Edible Oil Industries (AIMMI) and the Indonesian Oleochemical Manufacturers Association (Apolin) were involved in the signing with the China Chamber of Commerce for Import and Export for Foodstuffs, Native Produce and Animal By-Products (CFNA).

Zulkifli assured the public that the deal would leave the cooking oil supply undisturbed, arguing that the government had secured raw materials needed through the domestic market obligation (DMO) and the domestic price obligation (DPO).

In addition, China inked commitments related to Indonesian fishery products, but the ministry did not disclose the potential export value nor the amount purchased.

The signing involved the CFNA and four associations in crab, seaweed and demersal fish, as well as product-processing and marketing.

Zulkifli said that the government hoped the Chinese trade ministry would ease export restrictions so that Indonesian fishery industries could enter the market.

The Indonesian Seaweed Association (ARLI) said on Friday that Indonesian exports often met hindrances when sending their goods to China, stemming from regulations and policies from the two countries.

He added that the agreement signed between the two countries covered a framework between the two countries for trade, exchange of information, promotion and dispute settlement.

"For instance, if seaweed is classified as a non-animal origin commodity, then it should be exempted or treated differently from other fishery products," ARLI chairman Safari Azis said in a statement.