Indonesia: International pressure over palm oil export ban

In the face of rising global food costs, Indonesia is under increasing international pressure over its prohibition on palm oil exports.

The prohibition by the world’s top palm oil exporter has put upward pressure on edible oil prices at a time when supplies are already strained owing to bad harvests, the Ukraine crisis, and COVID-19-related labor shortages.

President Joko “Jokowi” Widodo defended the ban, which was announced on April 22.

It is a temporary measure after domestic costs of cooking oil, which includes palm oil, increased by more than 50%.

While the restriction has yet to be officially protested by Indonesia’s trading partners, India and Pakistan are showing signals of concern.

Governments are likely making strong statements to Jakarta behind the scenes.

“I have no doubt official complaints will be coming in, especially as Indonesia is hosting the G20 in Bali later this year and this is not exactly model behavior from a reliable trade partner or a country holding the presidency of the G20,” James Guild told.

“But there’s not much anyone can do. Indonesia is the largest producer of palm oil in the world so it holds all the cards and the government seems willing to accept the diplomatic heat in the interest of achieving its domestic goals.”

Jakarta’s prohibition came after a slew of previous measures aimed at limiting palm oil supplies, including a price limitation on cooking oil and a two-liter limit on purchases.

It led to desperate customers queuing for hours at stores.

Palm oil prices on the Bursa Malaysia Derivatives Exchange increased by more than 6% last month.

Ega Kurnia Yazid, an economic analyst says, “So far, no country has officially complained, including from the major importers of Indonesian palm oil such as China, India, and Pakistan.”

He added, “However, signs of an increase in food prices are starting to appear in these countries.”