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View all search resultsIndonesia to bypass ‘neighbor’ middlemen in natural resource exports
A senior minister highlighted the significant price gap between what Indonesia receives for selling commodities to neighboring countries and the prices at which they are eventually traded in their destination markets.
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Workers load palm oil fresh fruit bunches to be transported from the collector site to CPO factories in Pekanbaru, Riau province, April 27, 2022. (Reuters/Willy Kurniawan)
I
ndonesia wants to bypass “neighboring countries” as intermediaries for natural resource exports, including crude palm oil (CPO), arguing that routing shipments through third countries costs the country billions of rupiah in potential revenue and weakens its control over the commodity trade.
Coordinating Food Minister Zulkifli Hasan said the country should ship palm oil, as well as other top export commodities, directly to final buyers rather than selling it to neighboring countries that subsequently re-export the commodity at higher prices.
“Indonesia is the world’s largest CPO, nickel and tin producer, yet our exports go through neighboring countries. That sometimes frustrates me,” Zulkifli said in Batam on Wednesday, as quoted by state agency Antara.
Read also: Indonesia, Singapore at odds as gas export cut raises energy concerns
He cited a significant price gap between the price Indonesia receives for CPO sold to neighboring countries and the price at which the commodity is eventually traded in its destination market.
“CPO is priced at Rp 27,000 [US$1.50], but we sell it to our neighbor for Rp 15,000. That means we lose Rp 12,000. This has gone on for years. We no longer want to turn a blind eye,” he continued. “We want direct exports.”
Zulkifli framed the issue as one of Indonesia losing control over its natural-resource supply chains and surrendering potential gains to intermediary countries, despite being a leading producer.
