Indonesia Targets Pakistan for Expanded Palm Oil Exports After Domestic Supply Improves

Exports reopened after domestic supply improved

Indonesia sought to expand exports of crude palm oil and palm cooking oil to Pakistan after determining that domestic supplies were sufficient, according to ANTARA. Industry Minister Agus Gumiwang Kartasasmita presented Pakistan as a potential destination during a meeting in Jakarta with Pakistan’s Minister for Industries and Production, Syed Murtaza Mahmud.

The Indonesian government had decided to reopen cooking-oil exports after observing adequate availability in the domestic market and a decline in the price of bulk cooking oil. The move followed a period in which domestic supply and affordability had taken priority. For producers and traders, reopening exports created another outlet for inventories, while Pakistan offered demand from a large edible-oil market.

Temporary program covered 1 million tonnes

The government operated an accelerated export-distribution program for crude palm oil, refined, bleached and deodorized palm oil, and used cooking oil from June 7 to July 31, 2022. The program was intended to optimize and stabilize production and trading chains for CPO, RBDPO and UCO. It applied to all exporters and set a total export allocation of 1 million tonnes. Each participating exporter received an allocation in multiples of at least 10 tonnes.

Agus said the regulation could accelerate Pakistani imports of CPO and its derivatives. The policy potentially gave Indonesian refiners and plantation groups more flexibility to move crude and processed products abroad once domestic requirements had been met. For Pakistani buyers, increased access to Indonesian supply could broaden procurement options for both crude feedstock and finished palm cooking oil. ANTARA did not report a specific sales target for Pakistan, a contract value or a delivery schedule.

Bilateral trade supports the push

Indonesia also sought to advance negotiations on the Indonesia-Pakistan Trade in Goods Agreement, known as IP-TIGA. The government presented closer industrial and trade cooperation as part of the two countries’ post-pandemic economic recovery. Agus identified palm oil and crude palm oil as the Indonesian products with the greatest export potential in Pakistan. Other priority exports included viscose rayon staple fibre, cars and other motor vehicles, gearboxes and their parts, and uncoated paper and paperboard.

ANTARA reported that total bilateral trade grew by 6.65% over 2017-2021 and by 41.77% during 2021-2022. The publication gave total trade in 2021 as $3.9 billion, including Indonesian exports of $3.8 billion and imports from Pakistan of $185 million, with non-oil and gas products dominating both flows. The same report later cited a 2021 trade value of $3.6 billion, without explaining the difference. Indonesia had maintained a positive trade balance over the preceding five years.

Pakistan-linked investment in Indonesia totaled $5.45 million across 155 projects from 2018 to 2022. The investment covered food processing, textiles, wood, chemicals and pharmaceuticals. Indonesia also highlighted its 65 million micro, small and medium-sized enterprises, representing 99% of business units, contributing as much as 60% of national GDP and employing more than 119.6 million people, or about 96.92% of the workforce. Those wider industrial ties provide a base for bilateral cooperation, but the immediate commercial opportunity centered on redirecting more Indonesian palm oil toward Pakistani buyers.