On 23 March 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as the impact of the Federal Reserve's tapering and interest rate on the financial markets of Indonesia, infrastructure development, the biodiesel industry, car sales, a World Bank report, and more.

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Export of Indonesian crude palm oil (CPO) as well as derived products is expected to reach 22 million tons in 2014. As this year's CPO price is expected to average USD $1000 per ton, significantly higher than the average of USD $850 per ton in 2013, it will translate into higher revenue from the country's palm oil sector. The value of Indonesian CPO export in 2014 is estimated to accelerate to USD $22 billion due to dry weather threatening crops in Indonesia and Malaysia. Indonesia is the world's largest producer and exporter of palm oil.

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Indonesia Investments updated the company profile of Elnusa, an integrated upstream oil and gas company. Core business of Elnusa, which is part of the state-owned Pertamina Group, involves geoscience, drilling and oilfield services. As the company is closely connected to the Indonesian government, it would benefit of the government's commitment to increase oil lifting. However, the current condition of Indonesia's oil and gas sector is still not conducive for large investments. Elnusa is listed as ELSA on the Indonesia Stock Exchange (IDX).

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Indonesia's biodiesel consumption has risen considerably during the last three months after the Indonesian government raised the mandatory amount of palm oil (fatty acid methyl ester) blended in biodiesel from 7.5 percent to 10 percent. For power plants that use biodiesel the amount has been increased to 20 percent. Biodiesel consumption in Southeast Asia's largest economy jumped from 57,871 kiloliters in August 2013 to 101,857 kiloliters in September and to 116,281 kiloliters in October.

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In the first month of 2022, we detected some positive signs, both abroad and at home (in Indonesia) as there is growing evidence that the Omicron variant is encouraging strong herd immunity around the world, while not making too many people ill to the extent that they require hospitalization.

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Indonesia is the world’s biggest palm oil grower as well as the world’s biggest exporter of crude palm oil (CPO). Traditionally, palm oil exports are ranked among the top three export products of Indonesia (along with coal and natural gas). As such, palm oil is of crucial importance for the Indonesian economy.

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On 1 September 2018 the expanded B20 biodiesel program was launched. It means that the government of Indonesia requires all diesel fuel that is used within the country to contain biodiesel (with a 20 percent amount of bio-content, typically fatty acid methyl ester [FAME] that is derived from palm oil). This program will boost domestic palm oil consumption (which is important because palm oil exports are currently not doing too great amid low prices and anti-palm oil campaigns in various western countries), but more importantly the program aims to slash imports of fuel, hence encouraging a narrower current account deficit and a stronger rupiah. Meanwhile, the program also aims at reducing carbon emissions.

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On Wednesday (18/04) Indonesian Industry Minister Airlangga Hartarto met Norwegian Minister of Fisheries Per Sandberg to discuss trade. In the meeting Hartarto requested easier access for several Indonesian products on the Norwegian market. For example, lower tariffs for textiles and footwear. Meanwhile, Indonesia also wants to keep access to Norway for products that are derived from palm oil. Recently, Norway's parliament voted to ban the public procurement and use of palm oil-based biofuel.

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In the battle between Indonesia and the European Union (EU) regarding the latter's anti-dumping duties on Indonesian biodiesel exports, Indonesia won six out of seven legal challenges. Indonesia had challenged the EU's duties, set in 2013, on biodiesel imports from Indonesia and Argentina. The World Trade Organization (WTO) ruled, largely, in favor of Indonesia.

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Crude palm oil (CPO) production in Indonesia and Malaysia is expected to decline due to the impact of the El Nino weather phenomenon (that brought a prolonged dry season to Southeast Asia). CPO production in Malaysia could fall between 1.5 and 2 million tons this year according to Dorab Mistry, Director at Godrej International. Declining output in the world's two leading palm oil producers and exporters implies that palm oil prices should be able to rise further. At the start of this week palm oil futures traded in Kuala Lumpur (June delivery) rose to 2,779 ringgit (approx. USD $695) per ton, the highest level since March 2014.

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Although the Indonesian government has already announced that biodiesel subsidies have been raised to IDR 4,000 per liter (from IDR 1,500 per liter in 2014) and bioethanol to IDR 3,000 per liter (from IDR 2,000 last year) - in a move to protect the domestic biofuel industry as production costs exceed market prices amid the low global palm oil prices -, Indonesian biodiesel producers are eager to see the country’s biodiesel price is set based on a different benchmark than the Mean of Platts Singapore (MoPS).

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Reserves of crude palm oil (CPO) in Indonesia may have declined for a second straight month in October on the back of drought and an increase in exports from Southeast Asia’s largest economy. The delayed impact of drought (which even managed to dry up several rivers in West Kalimantan in October) limited production of CPO in recent weeks. Meanwhile, exports have increased after Indonesia and Malaysia - the world’s two top palm oil producers - scrapped export taxes to boost demand for this commodity.

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Indonesia has the potential to become a global force in the biodiesel industry because of the country’s position as the world’s top producer of crude palm oil (CPO). In 2014, Indonesia’s CPO production is estimated to total 30 million tons. Traditionally, Indonesia exports about 75 percent of its total CPO production, particularly to the giant economies of China and India. As such, this commodity is one of Indonesia's most important foreign exchange earners, apart from coal, in the non-oil and gas sector.

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Usage of biodiesel for transportation in Indonesia is expected to reach 7.2 million kiloliter by 2015, a sharp increase from 600,000 kiloliter in the first nine months of 2013. State-owned Pertamina is expected to supply the extra 6.6 million kiloliter of biodiesel. The reason why the Indonesian government is eager to develop palm-based biofuel for transportation purposes is to reduce the country's reliance on the import of expensive diesel fuel. Imports of fuels and gas are the foremost reason that Indonesia is coping with a wide current account deficit.

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