Indonesia threatens retaliation over EU palm oil ‘intimidation’

Biofuel producers in Indonesia called on the Indonesian government and European Union to find a “win-win solution” to a dispute over an EU legislation that will phase out palm oil-based biofuel manufacturing in the bloc, risking jobs and billions of dollars in Indonesia’s revenue.

Last week, Coordinating Minister for Maritime Affairs, Luhut Binsar Pandjaitan, warned that if the EU implements a ban on palm oil imports, Indonesia would retaliate strongly with possible bans on European products, including passengers jets, train coaches, and motor vehicles.

“We want a win-win solution. Retaliation is not a favorable option but, eventually, what else can we do? It could become necessary if we keep being intimidated,” said Master Parulian Tumanggor, chairman of the Indonesia’s Biodiesel Producers Association.

“If they stop biofuel, millions (of workers and farmers) will become unemployed. We don’t want that,” he added.

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Pandjaitan said that with Indonesia’s aviation industry expected to expand threefold by 2034, the country will require about 2,500 aircraft in the next two decades — a big market for European companies.

Aircraft demand from Indonesia is worth more than $40 billion and it will create millions of jobs.

“It’s a matter of survival. If they treat us like this, we will retaliate strongly. We are not a poor country, we are a developing country and we have a big potential,” Pandjaitan said in a briefing with the EU ambassador to Indonesia, Vincent Guerend, and European investors.

Darmin Nasution, chief economic minister, said Indonesia is considering a challenge to the EU legislation via the World Trade Organization, and will seek support from the Council of Palm Oil Producing Countries and the Association of Southeast Asian Nations.

Indonesia and Malaysia together produce about 85 percent of the world’s palm oil.

Foreign Minister Retno Marsudi spoke with her Malaysian counterpart, Saifuddin Abdullah, on the sidelines of Organization of Islamic Cooperation emergency meeting in Istanbul on Friday.

“We agreed to work together to fight against discrimination of palm oil in the EU,” she said via Twitter.

Nasution said palm oil contributed $17.89 billion to Indonesia’s economy in 2018 and almost 20 million workers depended on the plantations for their livelihood.

On March 13 the European Commission adopted new rules on biofuels based on sustainability criteria with a two-month scrutiny period. The EU said “best available scientific data” show palm oil plantations are a major cause of deforestation and climate change.

Palm oil plantations in Indonesia have resulted in massive deforestation on the islands of Sumatra and Kalimantan.

Guerend acknowledged the importance of palm oil to Indonesia in terms of jobs, but said that there was some flexibility in the regulation.

“It will be further modified in a few years’ time. It’s not cast in stone forever as the industry is dynamic, expanding, and reforming, and we take that into account,” he said.

“Our invitation for everyone is to work on sustainability because it’s in everybody’s interest,” he added.

This story was first published on Arab News

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