Indonesia Seeks to Boost Palm Oil Export to EU Member Lithuania

Indonesia is telling Lithuania that its palm oil is sustainable, while saying that its top commodity has met the national sustainability standards.

Foreign Affairs Minister Retno Marsudi hosted a bilateral meeting with her Lithuanian counterpart Gabrielius Landsbergis in her Jakarta office on Monday. Economic cooperation was high on the agenda.

During the trade talks, Retno had brought up Indonesian exports of palm oil, which she said was sustainably produced. Indonesia also stated that hundreds of its plantations had gotten the Indonesian Sustainable Palm Oil or ISPO certification. This is the country’s national sustainability certification scheme for palm oil, as the name suggests.

“I welcome Indonesian palm oil becoming one of the top export commodities to Lithuania,” Retno said at a press briefing shortly after her meeting with Landsbergis.

“With nearly 800 plantations in Indonesia already receiving the ISPO certification, I believe that Indonesia can provide more sustainable palm oil to Lithuania and to the greater European market,” Retno said.

Jakarta also wants Vilnius to be more open to Indonesian rubber and wood-based furniture for greater trade. Retno said that the current trade volume between Indonesia-Lithuania has “not reflected its true potential” although the numbers rose almost 43 percent year-on-year in the first half of this year.

She added: “To bolster our two-way trade and ensure a more balanced trade, I sought Minister Landsbergis’ support in facilitating more Indonesian products to enter the Lithuanian market, including for rubber, paper, and wood-based furniture.”

Landsbergis did not specifically comment on Indonesian palm oil during the presser, although the diplomat did say that the meeting with Retno revolved around economic relations.

“We had a great opportunity to talk about our growing economic ties in sectors such as IT [information technology], LNG [liquefied natural gas], renewable energy, agriculture, and even space technology,” Landsbergis told reporters.

Government data shows Indonesia-Lithuania’s trade rose from $43.4 million in 2021 to $53.7 million the following year. However, the bilateral trade has not been in Indonesia’s favor with Jakarta booking deficits over the past years. As a case in point, Indonesia’s deficit with Lithuania amounted to $30.3 million in 2022.

Trade data platform Observatory of Economic Complexity (OEC) reported that Indonesia’s main exports to Lithuania in 2021 were bi-wheel vehicle parts (20.6 percent), rubber apparel (11.7 percent), and margarine (7 percent). Palm oil accounted for 0.89 percent of what Indonesia exported to Lithuania that year.

Lithuania is a member of the European Union (EU) which has been critical of Indonesian palm oil.

Indonesia has been opposing the EU’s anti-deforestation regulation, better known as the EUDR, which mandates operators to prove that their products do not come from deforested land. Operators must include precise geolocation coordinates in their due diligence statements before they can have their products enter the European market.

Palm oil, rubber, and timber are among the commodities that are subject to the EUDR. The policy also applies to products derived from the said commodities.

Jakarta has been insisting that the EUDR should make way for ISPO-certified palm oil. According to the Indonesian Palm Oil Association, the ISPO covers areas such as no forced labor, fair treatment in supply contracts, as well as ban on peatland planting and primary forest clearance.

Indonesia and the EU are also currently negotiating a trade pact. This trade deal –better known as the Indonesia-EU Comprehensive Economic Partnership Agreement– is set to enter the 16th round of negotiations later this year.

Tags: cooperation, exports, Indonesia, palm oil, Lithuania