Jakarta/Indonesia (2/2). The European Union had provoked a “trade war” by issuing discriminative restrictions on Indonesian palm oil, President Joko “Jokowi” Widodo tweeted on Saturday. The reaction by many, a bit too late but E for Effort.
“Indonesia has 13 million hectares of oil palm plantations that produce 46 million tons [of crude palm oil, or CPO] per year. The EU has been saying that Indonesian palm oil is not environmentally friendly. This is essentially trade war, because Indonesian palm oil can be cheaper than their sunflower oil,” the president said.
The Malaysian and Indonesian government were set to commence a trade war since last year. Both governments agreed on a combined strategy following the outcome of the presidential election. Jokowi was re elected and in a surprise move joined forces with Prabowo Subianto who has taken a more centrist conservative, nationalist stance as a Defense Minister. “The palm oil issue with the EU is an element of economic warfare using NGOs and foreign civil society as proxy actors against Indonesia and Malaysia”, said an Jokowi official off record.
The tweet echoed Jokowi’s comment at the opening of the Indonesian Democratic Party of Struggle’s (PDI-P) 47th anniversary party in Jakarta on Friday.
The European Commission adopted a delegated act in March last year that classified palm oil as “unsustainable material.” This is exploited by the UK government which promised fairer conditions for trade with Indonesia.
The announcement came not as a surprise. The green policies of the German driven agenda, now heading the EU commission is long on the table of the leftist leaning governments in Europe. Foreign NGOs, namely groups like WWF, Greenpeace, Friends of the Earth (WALHI), the U.S. Rainforest Action Network, the Dutch Banktrack.org and the Finnish Siemenpuu have for long collaborated to create a false policy narrative.
Industry lacks Integrity.
But the blame bucket needs to go around with the Indonesian industry. Two families controlling 80% of the world trade of all paper and palm oil. The Indonesian conglomerates with a long history of tax fraud, forest destruction and other violations are merely too big and accumulate too much power to be sustainable.
Industry and NGOs agreeing, “Like any other industry good competition is a recipe for a healthy economy. Everyone scoffs at the idea we are held hostage by two families.”, an EU official said. “Break it up force competition”, was the view of a Greenpeace activist.
The campaign followed a decade long criminalization of the Indonesian palm oil industry by NGO actions. The NGO continue to this date to target the palm oil industry in the European countries and beyond to wage a proxy war against Indonesian interests.
Jokowi is faced with a myriad of economic challenged. His go-peasant policies are hitting the economic snag and does consistently not deliver. Floods, power shortages and the new capital move does not inspire confidence. Allegations of dodgy land deals and vested interests are already surfacing in Indonesian media.
Activism destroys Economies.
Recent reports The estimated damage to the Indonesian and Malaysian government’s range between 3 to 4 percent GDP according to academic research. The Indonesia economy has felt the pinch of the NGO campaigns.
Indonesia – the world’s top palm oil producer along with Malaysia – sent a joint letter in April last year to protest the “discriminative” act and warned the EU of retaliation.
However, political leaders in Indonesia realizing the years of negative campaigning against the Indonesian is unlikely be fixed. The European Union green zeal is backfiring as the economies are not able to absorb green leftist ideologies and lack the actual financial benefits to Indonesians.
In his speech on Friday, Jokowi said it was important for Indonesia to transform its economy by increasing export and reducing import, stressing the point that even though the country had kept growth at above 5 percent in the past five years, its current account is still in deficit.
Indonesia memiliki 13 juta ha kebun kelapa sawit dengan produksi 46 juta ton per tahun. Uni Eropa memunculkan isu bahwa minyak kelapa sawit (CPO) tidak ramah lingkungan.
Ini soal perang bisnis antarnegara saja karena CPO bisa lebih murah dari minyak bunga matahari mereka. pic.twitter.com/YzzihBQggX
— Joko Widodo (@jokowi) January 11, 2020
“We can’t keep exporting crude palm oil, we have to process it first into at least a half-finished product,” he said.
For that purpose, Indonesia has been converting crude palm oil into biofuel since the EU issued its restrictions.
The government has been promoting B30, a mix of 30 percent palm-oil based biofuel and diesel, to replace regular diesel since last year.
The plan is for the country to use B100, or 100 percent biodiesel, by 2030. The next version of the biodiesel, the B40, is set to be launched next year.
“Converting our CPO into B30 will save the country around Rp 110 trillion [$8 billion] per year. Once we have the B50… we could save more than Rp200 trillion,” Jokowi said.
The president said the move to biodiesel would help Indonesia reduce its reliance on fossil fuel.
The policy to increase export and reduce import will not only be applied on CPO but also on other commodities.
For example, the government now requires all of its mineral resources, including nickel, to be processed in domestic smelters, and ore export is now banned.
In a role reversal, the EU said it would file a complaint to the World Trade Organization (WTO) against Indonesia for banning nickel ore export.
Jokowi has already said Indonesia would be ready to face the EU at the WTO.
Indonesia plans to use its nickel to produce lithium battery for electric cars.
‘O war! thou son of hell
The Jokowi administration is caught between the realities of governance. Revenues and hard currency matters. Palm oil provides this revenue but hard decisions have to be taken. When will the presidency finally cut down the political juggernauts of environmental destroyers or will Jokowi’s legacy just be like any of his predecessors. Just another politician?
The war drums have been on the roll for some time. The Europeans been warned by the Indonesians and Malaysians, and the government of Indonesia for some time been told palm oil and paper are a dead end for the Europeans. The lines in the sand are drawn.