[Infographic] Palm Oil: Indonesia’s Foreign Exchange Hero (2025)

Palm oil is widely recognized as Indonesia’s foreign exchange hero. Its role as a key contributor to the national trade balance is undeniable, both through export earnings and import substitution. The palm oil industry not only strengthens the non-oil and gas trade balance but also reduces dependence on imported fossil fuels through biodiesel.

Export Earnings as Foreign Exchange Hero

Palm oil exports remain the backbone of Indonesia’s foreign exchange. In 2000, palm oil exports generated USD 1 billion, and by 2024 this figure had soared to USD 28.3 billion. The industry even recorded its highest export earnings of USD 39 billion in 2022.

The main export destinations in 2024 were China (20.4%), India (15.1%), the EU-27 (10.4%), Pakistan (9.3%), and the United States (6.9%). These figures show how international trade policies, including reciprocal tariffs and the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU CEPA), directly impact Indonesia’s palm oil exports.

Value-Added from Downstreaming

Palm oil’s role as a foreign exchange hero is further strengthened by downstreaming. The share of processed palm oil exports (RPO+RPKO) rose from 41% in 2011 to 74% in 2024. Finished products such as oleochemicals and biodiesel also grew from 7% to 16% over the same period.

Meanwhile, exports of raw palm oil (CPO+CPKO) fell sharply from 52% to 10%. This shift confirms the success of domestic downstreaming in creating higher value-added products.

Impact on the Non-Oil and Gas Trade Balance

Palm oil is crucial for maintaining a surplus in the non-oil and gas trade balance. In 2024, the trade balance with palm oil products reached USD 51.4 billion. Without palm oil, the surplus would have been much smaller—only USD 23.1 billion—and could even slip into deficit.

This proves that palm oil is the true foreign exchange hero behind Indonesia’s strong non-oil and gas trade performance.

Contribution Through Biodiesel

Beyond exports, palm oil also saves foreign exchange through the mandatory biodiesel program. By substituting imported fossil diesel with palm biodiesel, Indonesia reduces its reliance on energy imports.

In 2024, the oil and gas trade balance deficit was USD 20.4 billion with biodiesel, compared to a much larger USD 28.5 billion deficit without biodiesel. This shows the significant savings provided by palm-based biofuel.

Strengthening Indonesia’s Trade Balance

The combined contribution of palm oil exports and biodiesel created a trade surplus of USD 31 billion in 2024. Without palm oil, Indonesia would have faced a trade deficit of USD 5.3 billion.

Clearly, palm oil is not only a foreign exchange hero, but also a stabilizer of Indonesia’s trade balance and a driver of economic resilience. The surplus generated from palm oil strengthens the economy by creating jobs, increasing incomes, and sustaining growth amid global economic challenges.

Conclusion

Palm oil has proven itself as Indonesia’s foreign exchange hero. Through rising export earnings, successful downstreaming, and biodiesel substitution, the industry secures trade surpluses and protects the economy from external shocks.

In a world facing slower global growth, the contribution of palm oil remains vital to sustaining Indonesia’s economic strength.