Palm Oil Exports and B30 Policy Books Record Highest Trade Surplus in 2020
The Central Bureau of Statistics (BPS) has released data about Indonesia’s economic growth in 2020 which contracted by -2.07 percent compared previous year (c to c). This condition is result of the Covid-19 pandemic that has hit the entire world, including Indonesia.
The impact of pandemic also cause perfomance of international trade (export-import) has decreased. Export decreased by 7.7 percent, meanwhile the decline in imports was larger reaching 14.7 percent. Even though the export-import performance has contraction, Indonesia could still enjoy a trade balance surplus of USD 21.74 billion. Even this surplus trade in 2020 succeeded to booked a record as highest trade surplus. Previously, the largest trade surplus value occurred in 2011 amounting to USD 26.06 billion.
The large value of Indonesia’s trade surplus in 2020 cannot be separated from the role of the palm oil industry through the foreign exchange of palm oil product exports and the mandatory B30 policy.
First, foreign exchange from exports of palm oil products (including CPO and RPO, Crude and Refined PKO, and oleochemicals) throughout 2020 of USD 22.9 billion. Their foreign exchange has contributed about 83 percent of the exports of non-oil and gas sector. This shows that their foreign exchange made surplus trade of non-oil and gas sector getting bigger to reaching USD 27.7 billion. If palm oil products are not taken into account in the non-oil and gas sector balance, the surplus trade will be lower only around USD 4.7 billion.
Not only being the main contributor to the export of the non-oil and gas sector, but palm oil products also as the main contributor to the total foreign in 2020. Palm oil products have also succeeded in beating fuel oil products as the defending champion which always produces the largest export foreign exchange every year. This is indicated by the total foreign exchange reached USD 163.3 billion, the share of palm oil’s foreign exchange reached 14 percent or greater than share of fuel products was only around 11 percent.
Second, Indonesia’s trade surplus in 2020 is also an implication of saving foreign exchange imports due to the implementation of the mandatory B30 policy. Referring to APROBI data, the volume of biodiesel absorbed for the B30 program in 2020 reaches 8.4 million kiloliters. This volume is equivalent to the foreign exchange savings of fossil diesel imports of USD 2.66 billion, using an average MOPS diesel price of USD 50 per BBL and an exchange rate of IDR 14,400/USD. Saving foreign exchange as an implication of the B30 made the oil and gas sector trade balance deficit smaller to minus USD 5.9 billion. If there is no B30 program, it’s sector deficit will be higher around USD 8.6 billion.
If Indonesia does not export palm oil products and implements the mandatory B30 policy, it will cause a total deficit in trade balance of USD 3.88 billion. This shows that the role of the palm oil industry through the export of palm products and biodiesel production (B30) is able to save Indonesia’s trade balance and even enjoy an enourmous surplus trade.
Once again, the palm oil industry has consistently contributed to improving Indonesia’s trade balance. As the Indonesian nation, we should be grateful to it’s industry, because not many sectors of the national economy are able to play a role like a palm oil industry, especially in the pandemic situation and the sluggish global economy due to Covid-19.
Besides the large contribution in creating a surplus trade in 2020, the foreign exchange generated by export of palm oil products is also has a higher quality from a development point of view. This is because palm oil foreign exchange is generated comes from exports of processed products with a share of 78 percent, while the contribution of exports of raw materials (crude palm oil and crude palm kernel oil) is only 18 percent. This means that their foreign exchange shows success story of downstreaming in this country due to the collaboration and synergy between 3 million farmers and plantation companies and the downstream industries.
Palm oil foreign exchange is also generated from utilization of domestic resources through oil palm plantations are spread across 235 districts in 25 provinces in Indonesia. Then, their plantation also generated multiplier effect such as income generation at these regions and has the potential to prevent re-poverty due to the Covid-19 pandemic.
In addition, the productivity of the palm oil industry in generating foreign exchange also does not burden the government budget. On the contrary, it’s plays a role in creating state revenues both tax and non-tax, whose value is estimated at IDR 14-20 trillion per year.
We hope that in the future, the palm oil industry will again booked a new record for this country. The combination of policies and innovations have implications for increasing plantation productivity and downstream development for both export promotion and import substitution will generate a new leap of achievement in the sustainable national palm oil industry.
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