INDONESIA SUSTAINABLE PALM OIL (ISPO)

In an effort to convince the world market for palm oil, especially in European Union (EU), United State of America (USA) and Australia, Government of Indonesia and Government of Malaysia together with NGOs that operate in environments such as WWF formulate the formation Roundtable Sustainable Palm Oil (RSPO). RSPO is an industry standard that issued the certification for palm oil products that pass the verification/audit environment.

In an effort to achieve standardization, the countries of palm oil producers have attempted to improve the management of environment-friendly industry. Through the RSPO, palm oil products have been recognized as an environmentally friendly product and can be traded in internationally, especially in EU, US and Australia. RSPO ideas actually arise due to pressure from EU, USA and Australia, which inhibits the mobilization of palm oil products. This concept is loaded with interest. Raises fears of EU, USA and Australia will be the emergence of new market in the food products and non food products from palm oil. Fears are what make them the negative campaigning that palm oil products are products that damage the ecosystem of environmental and not good for human health. A malicious campaign to damage the world’s palm oil industry.

In the RSPO forum, bargaining position between producers and consumers are not balanced. Producers are placed in a very weak position. Lots of interest of producers who are not adopted in the agreement RSPO. In addition, EU, USA and Australia continue to do negative campaigning against environmental issues. Indonesia (GAPKI) see that the RSPO is no longer reflects the efforts of justice and more destructive to the palm oil industry available today.

Finally, GAPKI as council commissioner in RSPO out of this forum. This step is for GAPKI right in an effort to strengthen Indonesia Sustainable Palm Oil (ISPO). ISPO has been designed and formulated by Indonesia as an effort to enhance the bargaining position in the RSPO forum. But there are some important points in the ISPO it was not adopted in the RSPO. And as the largest producer in the world ought palm oil industry ISPO points into the RSPO. GAPKI has endeavored in every negotiation in RSPO. But because of heavy interest and impartiality of the producers finally GAPKI out of the RSPO.

As a further effort, Government of Indonesia and GAPKI will accelerate the realization of ISPO. ISPO as standardization macro national level towards sustainable palm oil industry will be used in the management of palm oil industry in Indonesia. ISPO concept will be brought in to bilateral negotiations with importing countries of palm oil.

The Indonesian government will ensure that Indonesia’s palm oil industry is very friendly to the environment. This is more effective than participate in the RSPO should be multilateral and full of interest. Because of its national, the ISPO will be integrated in to government programs on the environment. Government of Indonesia as well as major countries in sustainable development programs.

As the main initiator of the world environmental forum, the role of Indonesia in creating environmentally friendly industry will gain an appreciation by international community. So ISPO will be very effective for Indonesian palm oil companies in sustainable palm oil industry campaign. ISPO will also increase the competitiveness of Indonesia’s palm oil products in international markets. That is the reason why GAPKI dare to cake crucial decisions to withdraw in the RSPO forum.

INDONESIAN PALM OIL EXPORT DUTY - THE EFFECTS ON DOWNSTREAM INDUSTRIES

INDONESIAN PALM OIL EXPORT DUTY - THE EFFECTS ON DOWNSTREAM INDUSTRIES

Irfan Sungkar & Wiko Saputra

PT. Pavillion Capital

According to the plan of the Ministry of Agriculture of Indonesia of reducing the area under palm oil so as to have a stable price, export tax policy is an effective policy. An increase in the export tax would be of importance as it will lead to voluntary reduction in production area under palm oil as it would result into reduction of export to other countries. In this scenario, with implementation of progressive export tax policy on CPO, the export volume will reduce, hence increasing the quantity of CPO available for Indonesian domestic market.

The domestic consumers of CPO and cooking oil will be the greatest beneficiaries. The cost of cooking oil will be expected to reduce as a result of the reduction in CPO price since it is the main source of raw materials for the cooking oil industry in Indonesia. However, oligopolistic nature of cooking oil industry may distort price so consumers may not gain as much as possible.

The main losers with the implementation of the progressive export tax on CPO will be local CPO plantations and mills. Thgis is the main reason why GAPKI (Gabungan Pengusaha Kelapa Sawit Indonesia) increasingly vocal against this policy. Total area declined, total output reduced, limiting export growth. This effect of the export tax is great on the producers than on traders because the exporters always shift the tax bundle to the producers hence offering reduced prices for their products.

With this export tax policy, the government can successful to keep the cooking oil price down when the world CPO price increased or when rupiah was substantially depreciated. The impact of export tax led to depression of production resulting to reduced quantity produced. Producers, mainly smallholders, have suffered a great deal due to the policy. As the domestic price of CPO is depressed by this policy, the farm gate price of the farmers’ product (fresh fruit bunch or FFB), declines substantially.

By Presentation
POINTERS PRICE TRENDS MALAYSIA PALM OIL COUNCIL (MPOC)
8-14 August 2011
Kuala Lumpur Malaysia
see http://www.pointers.org.my