Indonesia’s palm oil industry urges faster classification rules to prevent export delays
POPSI is calling for faster revisions to Indonesia’s rules for classifying downstream palm oil products. The organization warns that regulatory delays could hold up exports, increase pressure on mills and storage, and weaken demand for smallholders’ fresh fruit bunches.
Industry seeks faster rules for new palm products
Indonesia’s palm oil sector is pressing the government to accelerate updates to the technical classification of downstream products, warning that regulation is falling behind advances in processing technology. The Indonesian Palm Oil Farmers Organization, known as POPSI, wants revisions to Minister of Industry Regulation No. 32 of 2024 so that new products can be tested, identified and classified before administrative gaps obstruct commercial shipments.
According to PalmOilMagazine, POPSI Chairman Mansuetus Darto said the industry is not seeking automatic exemptions for every newly developed product. Instead, it wants a faster government mechanism that assigns classifications according to technical specifications and product characteristics. His statement was received by the publication on Saturday, Sept. 26, 2026.
Product diversification tests the existing system
POPSI said Indonesia produced around 200 downstream palm oil products in 2024. Historical data cited by the organization indicate that Malaysia has at times produced as many as 300. The comparison reflects the expanding range of refined products, oleochemicals, fractions, intermediates, residues and by-products generated by increasingly sophisticated processing operations.
Regulation No. 32/2024 already covers several further-processed palm commodities, including methyl esters and fatty matter. POPSI argues, however, that continuing technological development is creating variants that do not fit adequately within the current nomenclature. A product may therefore be ready for commercial production and have confirmed buyers but still lack a suitable regulatory classification for export procedures.
The organization pointed to Malaysia’s institutional capacity as a possible reference. POPSI said the Malaysian Palm Oil Board has developed testing capabilities and analytical methods for establishing the quality profiles and technical specifications of new oleochemical products, including products for which no official testing method is yet available.
Customs laboratory role proposed
POPSI has proposed allowing Indonesia’s Directorate General of Customs and Excise to conduct laboratory tests on new products when necessary. Results could support classification according to the product’s actual characteristics and specifications, reducing the interval between commercial development and formal recognition in trade documentation.
The group also wants closer coordination among the Ministry of Industry, the Ministry of Trade and the Directorate General of Customs and Excise. Its requested revision of Regulation No. 32/2024 would incorporate technically verified products, reassess relevant technical parameters and establish a classification-update process capable of responding more quickly to industrial innovation.
Export bottlenecks could reach smallholders
POPSI warned that the consequences would not be confined to exporters or downstream manufacturers. If unclassified products cannot move to buyers, inventories could accumulate and storage capacity could tighten. Pressure could then spread from refineries to palm oil mills, limiting their capacity to purchase and process fresh fruit bunches, or FFB.
For smallholders, weaker mill demand could mean longer delivery queues, declining FFB prices and the need to transport crops to more distant facilities. A POPSI policy brief cited storage-tank pressure at several mills alongside mill queues and falling FFB prices. The organization argues that classification policy must therefore account for the full chain: downstream product approval, export continuity, refinery inventories, mill throughput and farm-level demand.
The requested reform is intended to prevent the regulatory cycle from lagging behind product development. For Indonesia’s expanding downstream palm industry, the central issue is whether technical verification and customs nomenclature can be completed quickly enough to keep commercially viable products moving without weakening raw-material absorption upstream.
