Jakarta to lift oil export ban soon

Indonesia stopped palm oil shipments abroad to stabilise prices in domestic market

ISLAMABAD:

Indonesian Ambassador Adam Mulawarman Tugio on Wednesday said that the Indonesian government had temporarily banned global palm oil exports to regulate domestic markets and provide subsidised edible oil to its population.

Talking to APP in an interview, the ambassador said that considering the global trade dynamics and the world supply chain, the decision was made on banning palm oil exports, which would improve price stability in Indonesia’s domestic market.

“With the onset of Ramazan, edible oil consumption increases in Indonesia and it becomes difficult to provide the commodity to the local market of 270 million people along with exports,” he pointed out.

“The decision was made after lengthy deliberations on food security and is likely to be revised soon as it is part of a short-term policy that will stabilise palm oil prices in the domestic market.”

According to the ambassador, at present the global consumption of palm oil is 70 million tons, of which 33 million tons are produced in Indonesia.

Indonesia is the world’s largest exporter of palm oil, which also impacts its domestic market.

Calling it a temporary ban, the envoy said that it would be reviewed by the Indonesian government after which supply of palm oil would resume to the world market including Pakistan.

Tugio emphasised that the policy was designed to meet the demand for palm oil in the Indonesian market, both from ordinary and industrial consumers. “People have been suffering for the past few months and the price of palm oil has been rising in the local market.”

He attributed the widening of demand-supply gap and rising prices in Indonesia to the drop in supply of palm oil.

Responding to a question, the envoy said that Pakistan was a big consumer of Indonesian palm oil and was importing $2.8 billion worth of palm oil annually.

Meanwhile, talking to APP, former Islamabad Chamber of Commerce and Industry (ICCI) president Amir Waheed, who was also a palm oil importer, said that the Indonesian ban on exports would have an impact on both industrial and domestic consumers in Pakistan.

He pointed out that due to the widening demand-supply gap, prices of edible oil would increase further in Pakistan’s market.

He added that Indonesia was a major contributor to the global palm oil market and the ban on exports would lead to an increase in prices in the world supply chain.

Senior business leader and former ICCI president Atif Ikram, who has ghee and oil mills in Islamabad, argued that Indonesia’s ban on palm oil exports would create challenges for Pakistan’s industry.

“We are assessing the situation and a strategy is being developed in this regard,” Ikram said.

According to data issued by the Pakistan Bureau of Statistics (PBS), palm oil imports surged 46.74% in the first three quarters (Jul-Mar) of current fiscal year as compared to the corresponding period of last year.

Palm oil imports during the Jul-Mar FY22 period were recorded at $2.73 billion against imports of $1.86 billion in Jul-Mar FY21.

On the other hand, soybean imports went up 113.73% to $103.28 million as compared to imports of $48.32 million during the last fiscal year.

On a year-on-year basis, palm oil imports recorded an increase of 5.43% in March 2022 as they reached $290.52 million against imports of $275.55 million in March 2021, according to the PBS data.

Soybean imports during the month stood at $11.75 million as compared to zero imports in the same month of previous year.

Meanwhile, on a month-on-month basis, palm oil imports dropped 6.21% in March 2022 as compared to imports of $309.77 million in February 2022.

Imports of soybean, however, went up 27.7% in March 2022 as compared to imports of $16.77 in February 2022.

Overall food imports increased 15.46% from $6.12 billion last year to $7.07 billion in the current fiscal year.

 

Published in The Express Tribune, April 28^th, 2022.

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