InfoSAWIT, JAKARTA - The demands in the export countries on CPO and its derivative would increase in every single year as the dynamic in the international trade. In addition the free trade would be done in the smaller form – the bilateral business though there have been regional and international trade agreements.
The international trade in Free Trade Agreement (FTA) would always be done with the regional trade agreement, such as, CAFTA (China), AJCEP (Japan), AIFTA (India), and EU-ASEAN (European Union). The trade would be re-strengthened by making Preferential Tariff Agreement (PTA) between two countries in palm oil business, namely between the producer and consumers or the exporter.
The issues in economic trade agreement including CPO and its derivative could be seen from the past, such as, China – ASEAN (CAFTA) in 2008. It was re-confirmed by the bilateral trade between Indonesia and China in 2009 to 2010. In the bilateral trade, Indonesia did not have better strategy that it from Malaysia which put the derivative products within HS No. 15. This made the derivative products from Indonesia get import duty to China.
The weak trade strategy and diplomacy from Indonesia made the CPO derivative products uncompetitive in China. The different import duty was that Malaysia had 10% while Indonesia had 16% because Malaysia’s products were put in the Early Harvest Program (EHP) lists that the two countries agreed in 2008.
In 2010 the CPO derivative products were put in the EHP after struggling for about two years and the same case with the other countries, such as, Pakistan, India, Japan, and European Union.
The minimum knowledge that the Indonesia’s trade attachés became the weakness to do trade diplomacy to the CPO exporter countries. To increase the exchange income to the country in the future, the government and the business world should cooperate well, such as,
The first, consolidating the data of palm oil nationally which covers the newest and accurate data accountably and transparently. The width, the ownership, the license, the production, and workers in the plantation should be available for the public to be the reference of the actual condition of palm oil industries nationally for the stakeholders to make decisions.
(For more, please read Editorial, InfoSAWIT, December 2019)