Indonesian palm oil exports hit 2.92 million tons in July, 15.87 percent higher than the previous month - Photo: GAPKI

JAKARTA (TheInsiderStories) – The European Commission (EC) has imposed temporary duties ranging from 8 to 18 percent on imports of subsidized biodiesel from Indonesia, the commission announced on Tuesday (08/13).

The new tariff will be effective starting today and until the next four months and opened to extends the policy in five years. The tariffs target hit several major producers such as PT Caliandra Perkasa (8 percent), Wilmar Group (15.7 percent), Musim Mas Group (16.3 percent), Permata Group and other exporters (18 percent).

“The new import duties are imposed on a provisional basis and the investigation will continue with a possibility to impose definitive measures by mid-December 2019,” the EU executive said in a statement.

The European Commission launched an anti-subsidy investigation in December following a complaint by the European Biodiesel Board. The investigation team “found that Indonesian biodiesel producers benefit from grants, tax benefits and access to raw materials below-market prices. This inflicts a threat of economic damage to EU producers,” said the statement.

Based on the European Commission’ statement, during January to September, Indonesia’ biodiesel market share has jumped to 3.3 percent or by 516.08 million tons. In the same period in 2017 and 2016 Indonesia’ biodiesel market share was 0.2 percent and 0.3 percent.

Currently, the EU biodiesel market is worth an estimated 9 billion Euros (US$10.1 billion) a year, with imports from Indonesia amounting to 400 million Euros.

The new EC duties are another blow to Indonesian biodiesel producers, after the organization said in March, 2019, that palm oil should be phased out of renewable transportation fuels due to palm plantations’ contribution to deforestation.

Palm oil is the world’ most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics. But environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

Responding to that, Indonesia’ Coordinating Minister for Economy Darmin Nasution said he will immediately recommend to an inter-ministerial team a 20 percent – 25 percent tariff on EU dairy products as the appropriate response to the EC’ anti-subsidy duties on palm biodiesel from Indonesia.

“Later I have to coordinate, if we now suddenly do it without any preparation, the consequence is that the cost of the product that uses it as raw material will definitely increase. I have to keep the cost of production from the domestic industry which is ultimately used by consumers does not rise. Don’t contribute to inflation anymore,” he told reporters yesterday.

Price increases will occur if the government does not prepare or ensure a new source for dairy products. Therefore, the government will coordinate with importers first.

“We must pay attention to the domestic market as well. But we will certainly apply and we have asked them to divert their sources, not from Europe, we will give a time limit and if they have implemented we will invite them again we will speed up,” he explained.

Indonesian trade minister Enggartiasto Lukita also had told Indonesia’ dairy importers to look for new suppliers outside Europe and threatened to hike existing tariffs on EU dairy products, which currently range from 5-10 percent.

“If the parameters are not fair, its a step toward protectionism and a trade war, and we will not stay silent for the unfair treatment,” he told an economic forum in Jakarta.

US$1: 1.12 Euros

Written by Lexy Nantu, Email: lexy@theinsiderstories.com