JAKARTA-President Joko Widodo has appointed Mahendra Siregar as Deputy Minister of Foreign Affairs to side with Indonesian Foreign Affairs Minister Retno Marsudi. Mahendra, who is Indonesian Ambassador to the US and former Executive Director of Council of Palm Oil Producing Countries (CPOPC), is tasked with supporting the palm oil industry.
His appointment is considered to be a strategic move of President Jokowi’s administration as palm oil is important commodity for Indonesia. Mahendra, who is also the former deputy trade minister and deputy finance minister, is tasked with securing sustainability of the palm oil industry.
“Secondly, securing sustainability of the palm oil industry is important and needs to be well guided. The stakes are too high, apart from achieving a target of US$25 billion in exports, the Government also wants to save U$10 billion in foreign exchange reserves,” Mahendra explained the second task for him after a meeting with Jokowi at the Presidential Palace on Friday (25/10/2019).
Currently, Indonesian palm oil is facing pressure from the European Union (EU). The European Commission and several European countries have weighed up plans to restrict imports of palm oil amid growing concern about the environmental impact of the crop. The EU has proposed criteria using the Indirect Land Use Change (ILUC) methodology that classifies palm oil as unsustainable.
Under the new EU law, the use of more harmful biofuels will be capped at 2019 levels until 2023 and reduced to zero by 2030. The law has caused an uproar in palm oil producing countries. Indonesia has threatened to challenge it at the World Trade Organization.
Jokowi had also given a stronger mandate to Mahendra for economic diplomacy. The President told Mahendra to take opportunity from trade war between China and the US to boost palm oil export. It is in line with palm oil stakeholder’s have in mind to boost export to China.
President Director the Indonesia Oil Palm Plantation Fund Management Agency (BPDPKS) Dono Boestami once said that, China is now the world’s second-largest importer of edible oils and soybean is the most commonly consumed, which account for 40% of its total import while palm oil consumption around 20%. Soybeans are also one of the main products the US sells to China.
If China stopped buying soybean from the US because of the trade war, it would be possible for China to convert soybean to other vegetable oil products such as palm oil. Under such circumstances, Indonesia is believed to have a tremendous opportunity to increase the export volume of palm oil products to China.
“We expect China raises its palm oil consumption at least to 30%,” Dono said at the Prime Talk program on Metro TV on sidelines of the 34th Trade Expo Indonesia (TEI) at Indonesia Convention Exhibition (ICE), BSD City, Tangerang, Banten, Wednesday (16/10/2019).
Palm oil is important for Indonesia as it has contributed to economic benefits. No wonder the President deemed it necessary to task the deputy foreign affairs minister with supporting palm oil. ***