PALMOILMAGAZINE, JAKARTA – The palm oil commodity industry in Indonesia experienced a prosperous period until the middle of 2022, primarily driven by a series of events related to the complexities of 2021. This surge in prosperity was linked to several key factors:
The year 2021 saw a significant rise in inflation in developed countries, which was exacerbated by the COVID-19 pandemic. As people worldwide stayed home due to pandemic restrictions, many developed nations implemented extensive fiscal measures to support their economies.
Fortunately, Indonesia did not have to allocate as much fiscal incentive as these developed countries. For instance, the United States provided substantial financial assistance, with a total of up to US$ 22 trillion, including $3,000 per individual.
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The year 2022 brought about a shift in dynamics. Demands for palm oil decreased, production slowed down, and the cost of shipping increased, resulting in high inflation. The challenges faced in 2022 were the consequences of shifting demands, supply fluctuations, and various other factors.
After that the war between Russia and Ukraine got intense which eventually made commodity trade in the world complex. The impact for Indonesia was the capital outflow which means, Indonesia should spend fund or modal from its revenue to other countries both direct and indirectly. After that the exports were stopped, production got pressed. These happened for the past two to three years.
Though rupiah got recession, it was stable still. It just needed stimulus by escalating interest rate.
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Head of Industry & Regional Research, Office of Chief Economist, PT Bank Mandiri Tbk., Dendi Ramdani said, commodity prices increased beyond expectation. But from every event, it was lucky enough for commodity sectors in Indonesia. Indonesia’s economy in 2020 once decreased to be -2,0%, but in 2021 it increased 3,1%, increased again to be 5,3% in 2022. In 2023 it is predicted to be flat at 5,0%.
“We enjoyed the time when commodities got more expensive. Our economy still develops at about 5%,” Dendi said in Focus Group Discussion Palm Oil Industry with the theme “Crude Palm Oil (CPO) Price & Economic Outlook 2023-2024,” that Palm Oil Plantation Fund Management Agency (PFMA) did and attended by Palmoilmagazine.com in the midst of September 2023 in Medan
Dendi Ramdani also said that Indonesia’s economy could be strong enough. It is supported by plantation sectors. The expensive commodity delivered economic profits for Indonesia though other countries got decreasing economy.
He also told, the very expensive commodity by the late of 2021 and the peak was in April 2022 was abnormal. “At the time, China got increasing demands after they were free from Covid-19 pandemic,” he said. (T2)
