PASPI urges Indonesia to strengthen palm oil diplomacy as trade barriers increase

Industry seeks earlier action on trade policy

Indonesia should strengthen its palm oil diplomacy as international trade barriers increase, according to the Palm Oil Agribusiness Strategic Policy Institute, or PASPI. The institute wants Jakarta to move beyond reacting to disputes and identify potentially damaging policies while they are still being drafted.

PASPI Executive Director Tungkot Sipayung said diplomacy should serve as a form of market intelligence. Its success, he argued, should be measured not only by the resolution of existing disputes but also by Indonesia’s ability to prevent or soften foreign measures that could harm its domestic palm oil industry.

The proposal is aimed at protecting the competitiveness of one of Indonesia’s major commodities amid sustainability requirements and other market-access conditions. It would require closer monitoring of policy development in importing countries, alongside earlier engagement by the government and industry.

Export diversification reduces reliance on EU

Indonesia’s diplomatic efforts in recent years have already produced positive results through the diversification of palm oil export destinations, Sipayung said. Indonesian shipments now reach India, China, Pakistan, Bangladesh, African countries, the European Union and North America.

The EU currently accounts for only 8–10% of Indonesia’s palm oil exports, according to Sipayung. That broader geographical spread means the industry is no longer dependent on the European market, although EU regulation remains relevant for companies serving the bloc and for the wider debate over sustainability standards.

Diversification gives producers and exporters alternative outlets when access to an established market becomes more difficult. It also broadens the diplomatic agenda: Indonesia must maintain relations with major Asian buyers while developing markets in Africa and North America and continuing to address European rules.

Government-backed advocacy expands

ANTARA reported that the Plantation Fund Management Agency, known as BPDP, is supporting international palm oil diplomacy through programs involving government institutions, industry participants, academics and other stakeholders. The initiatives include stronger relations with leading importing countries, trade missions designed to expand export markets, and litigation and advocacy against policies considered discriminatory.

The effort also covers campaigns in international media and support for global palm oil forums and conferences. PASPI’s approach would make these activities more preventive, using information gathered in overseas markets to respond before proposed regulations become established barriers.

Domestic governance remains part of the response

Puspo Edi Giriwono, head of IPB University’s South East Asia Food and Agriculture Science & Technology Center, said palm oil diplomacy remains strategically necessary because new trade obstacles continue to emerge in several countries. He argued that some sustainability standards treat palm oil differently from other vegetable oils.

As an example, Puspo Edi questioned why palm oil must meet sustainability and deforestation-related conditions to enter the European market while comparable requirements are not applied to soybean oil, despite deforestation associated with production in Brazil. His comments frame the dispute as an issue of consistency between commodities rather than opposition to sustainability itself.

He also said stronger international diplomacy must be accompanied by improved governance within Indonesia. Better production processes, product quality and environmental and social practices would strengthen competitiveness and increase confidence among overseas buyers. For producers, processors and exporters, the proposed strategy therefore has two connected elements: challenging unequal market-access rules abroad while demonstrating credible production standards at home.