Palm Oil Contribute the Biggest Foreign Exchange During the Covid Pandemic
The palm oil industry has again shown its superiority. Even in the Covid-19 pandemic, the palm oil industry was still able to contribute foreign exchange of USD 10.06 billion in Semester 1/2020. Compared to the same period in 2019, where foreign exchange generated from exports of palm oil and its derivative products (oleochemicals and biodiesel) was only USD 9.46 billion. It means that the export foreign exchange generated by the palm oil industry in this period is greater than the previous period.
Foreign exchange exports of palm oil and its processed products also succeeded in contribute to creating Indonesia’s trade balance surplus of USD 5.5 billion in the same period. With such a large foreign exchange value, the palm oil industry has placed the largest foreign exchange earner among other national export industry sectors. Meanwhile, the second position is occupied by the mineral fuel sector with an export value of USD 9.3 billion.
By using this BPS data, we can understand the importance of foreign exchange generated by the palm oil industry in Indonesia’s trade balance. In Semester 1/2020, the oil and gas trade balance experienced a deficit of USD 3.5 billion. Meanwhile, the non-oil and gas balance (including the trade balance for palm oil and processed products therein) experienced a surplus of USD 9.05 billion.
If we don’t take the foreign exchange into account from the palm oil industry, then the non-oil and gas balance will turn into a deficit of USD 1 billion and make the deficit in the total trade balance even bigger of USD 4.5 billion. This further shows that the achievement of the oil and gas and non-oil and gas trade surplus in Semester 1/2020, which is in fact in the middle of the Covid-19 pandemic, cannot be separated from the contribution of foreign exchange from palm oil.
Palm oil foreign exchange has long been the determinant of the non-oil and gas trade balance surplus. In the 2012-2019 period, the net value of Indonesia’s non-oil and gas exports (other than palm oil and its processed products) decreased so that the non-oil and gas trade balance without palm oil always experienced a large deficit, even the non-oil and gas trade deficit without palm oil had reached USD 17.5 billion in in 2012.
On the other hand, the export foreign exchange of palm oil and its derivative products tends to increase from year to year, so that the non-oil and gas trade balance always experiences a surplus during the 2012-2019 period. Even at certain times, the oil and gas foreign exchange surplus is not only able to create a non-oil and gas trade balance surplus, but also create a surplus in the oil and gas and non-oil and gas trade balance. This is more complement our empirical evidence on the importance of the palm oil industry in improving Indonesia’s trade balance.
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