US-China Trade War is Opportunity for Indonesian Palm Oil

INDONESIA is believed to have a tremendous opportunity to increase the export volume of palm oil products to China.

US-China Trade War is Opportunity for Indonesian Palm Oil

INDONESIA is believed to have a tremendous opportunity to increase the export volume of palm oil products to China. The opportunity comes after a trade war between China and the United States will take effect immediately.

The US government plans to impose high import tariffs on about 800 Chinese products that will take effect on July 6, 2018. Those products includes machinery and manufacturing equipments, electronic goods, to transportation. As a reprisal, China responds by imposing 25% tariff on 659 US products, ranging from soybeans, seafood, to cars worth US$ 50 billion.

Bhima Yudhistira, an economics researcher for the Institute for Development Economics and Finance (Indef) sees the threat of imposing tariff on US soybean by China as an opportunity for Indonesian palm oil.

implementation of those tariff barriers will make the price of soybean oil going up by around 25 percent. Thus, China will try to convert the soybean oil products to other vegetable oils such as palm oil (CPO). "China`s domestic demand for vegetable oil is quite large, (so it`s) a big opportunity for Indonesia," Bhima said as quoted by Bisnis.com.

Indonesia, the world’s biggest palm oil producer, exported 3.73 million tonnes of palm oil to China last year, the largest export destinations after India and the European Union. This opportunity is not only for Indonesia, but also for other palm oil producers. "Indonesia and Malaysia have a big chance," Bhima said.

Indef recorded, US has exported about US$ 14 billion of soybeans, according to the US Department of Agriculture, and China bought about half of the US’ total soybean volume of exports.

Bhima also said the impact on the imposition of import duties can be quickly seen in China, since the agriculture sector absorb large number of labour. Earlier, during a visit to Indonesia, Chinese Prime Minister Li Keqiang expressed his commitment to increase import quota of Indonesian palm oil by at least 500 thousands tonnes. According to Li, China currently consumes 5 million tonnes of palm oil. Li promises to arrange further talk about it with various related parties. ***