Bali. Indonesia got criticisms at a recent international conference for banning palm oil export earlier this year as the policy was catastrophic, particularly to the developing economies reliant on Indonesian palm oil.
“I have to point out the biggest mistake that Indonesia made in 2022, and that was banning the export of palm oil and palm products,” vegetable oil market expert Dorab E Mistry said at the 2022 Indonesian Palm Oil Conference (IPOC) in Bali on Friday.
“You are punishing the millions of consumers in the developing world who are dependent on palm oil from Indonesia,” Mistry told the conference.
Indonesia also caught flak from Mistry for the extremely high export levy and tax, which if combined, could top $550 per metric ton. Fortunately, the Indonesian government has extended the export levies on palm oil products until year-end. Mistry also listed the reduction of the export tax to almost nil as one of the best decisions Indonesia made this year.
“Export taxes and levies are not the answer, but they are better than a ban. But try to keep export taxes and levies to a minimum. Remember that your customers are from the developing world. Never ban exports,” Mistry, who is also the director of Godrej International Ltd, said.
The government banned CPO exports in April in the wake of a serious edible oil shortage in the country that becomes the world’s largest CPO producer, although the decision was reversed after several weeks.
Pakistan: A Victim of the Export Ban
A separate 2022 IPOC panel session revealed that the short-lived palm oil export ban took a toll on Pakistan. Abdul Rasheed Janmohammed, the former chairman of Pakistan Edible Oil Refiners Association (Peora), said that Pakistan faced the most vulnerable stock situation when Indonesian palm oil stopped coming into the country.
"It was a difficult time. Pakistan’s import dependency on Indonesia is almost 90 percent. This is a matter of food security. Normally, in Pakistan, we would have 250,000 to 300,000 tons of oils. But our stocks came down to hardly 21,000 tons during the embargo," Rasheed told the conference.
"But I'm glad this episode is over. Hopefully, in times to come, Indonesia will have more liberal policies," he said.
Data showed in January-September 2022, Indonesia accounted for 90 percent of Pakistan’s palm oil imports, with the rest coming from Malaysia. In 2019, 80 percent of the imported palm oil in Pakistan came from Indonesia.
In late April, Indonesia decided to temporarily halt exports of palm oil and its derivatives to drive down cooking oil prices. At the time, President Joko “Jokowi” Widodo told the palm oil industry that domestic needs should come first. The export restriction was in effect for about three weeks.