Malaysia Controls Palm Oil Market After Jokowi Issues CPO Export Ban

Director of the Center of Economics and Law Studies (CELIOS) Bhima Yudhistira said Malaysia controlled 84 percent of exports of crude palm oil (CPO) after the implementation of the ban on Indonesian CPO exports.

Malaysia previously had a share of about 27 percent of the world’s total CPO production or had a production capacity of 20 million tons per year.

“With Indonesia’s absence in the international CPO market after the export ban, Malaysia has finally become the ruler of 84 percent of total CPO exports,” he said.

According to him, this was a policy error that earned Malaysia two “collapsed durians”.

First, the price of CPO after the export ban rose 9.8 percent compared to one month ago.

“The current price of CPO is 6,400 RM per tonne,” he continued.

Second, palm oil importers especially in India, China and Europe are looking for palm oil alternatives to Malaysia.

As a result, farmers and the CPO industry ecosystem in Malaysia are flooded with contracts. It is feared that the contract is valid for a minimum of 1 year in the future.

“When the CPO export ban is lifted, it is not easy for Indonesian palm oil producers to find potential buyers because they are already bound by a contract with Malaysia,” he said.

The existence of this prohibition makes export foreign exchange lost up to US $ 3 billion per month from Indonesian CPO exports run to Malaysia.

In addition, when the CPO export ban was lifted, Indonesia did not immediately get CPO buyers back in the international market.

“Yes, not everything will automatically return to normal. Moreover, the impact of the ban on CPO exports has caused trauma for overseas buyers because policy uncertainty in Indonesia is quite high,” he said.

Previously, according to data from ITS, a cargo surveyor company, on May 1-5, Malaysian CPO exports jumped 67 percent compared to the same period the previous month. Adequate supply makes the price corrected.

Tags: Malaysia, palm oil, ban, CPO, importers, share, exports, Indonesia, Crude palm oil, Production