Indonesia is accelerating downstream development in the crude palm oil (CPO) sector as it aims to strengthen its role in global price formation for the commodity. Despite being the world’s largest producer and consumer of palm oil, key pricing benchmarks are still shaped by trading hubs in Malaysia and Rotterdam.
Agriculture Minister Andi Amran Sulaiman said the country’s production dominance has not yet translated into pricing power. According to him, a significant share of palm oil exported by Malaysia actually originates from Indonesia, yet international markets and buyers continue to determine global price levels.
The government is prioritizing biofuel development as a key downstream industry. Officials expect biofuel exports to significantly increase palm-oil-related revenues, while processed products such as margarine and cooking oil could further boost export earnings through higher value-added production.
Authorities also plan to redirect part of CPO volumes originally intended for export toward domestic processing. Up to 5 million tons of palm oil could be used for biodiesel production, reducing diesel imports and potentially supporting global prices by tightening supply.
Economists note that expanding downstream industries is essential for accelerating economic growth in Indonesia. In addition to palm oil, the government intends to expand processing of coconut and gambir products to increase the value of agricultural output and create new jobs.
