Chances slim but RI fights on for palm oil

JAKARTA. As the third Asia Pacific Economic Cooperation (APEC) senior officials meeting ended on Saturday, Indonesia was yet to receive an affirmative response from other countries on its proposal to put palm oil and rubber on the group’s list of environmental goods eligible for tariff reduction.

With months left before the APEC Summit, Indonesia appears to have a slim chance of securing such an endorsement from other economies.

Trade Ministry director general for international trade cooperation Iman Pambagyo said APEC members still had until August to assess the Indonesian government’s proposal.

“In facing objections from APEC members against an extension of the [green] list this year, Indonesia is designing a new strategy to channel our aspirations,” Iman said.

“Whether or not the new strategy will succeed in including our products on the list is a different issue,” he said.

In the last meeting, Indonesia proposed to promote agro-based products that contributed to the “environment, renewable energy, rural development and poverty eradication”.

Chile and Peru threw their weight behind the proposal during the meeting, while Canada expressed similar support during a separate bilateral meeting, according to Iman.

During its APEC chairmanship this year, Indonesia is trying to put its main export commodities — palm oil and rubber — into the hard-negotiated list of 54 green goods on which tariffs will be capped at 5 percent and eliminated by 2015. Indonesia has persuaded other members since the first and second senior official meetings in early February and April, but support has been insufficient.

Only Chile, Peru and Papua New Guinea conveyed their support, while other members refused and instead put emphasis on implementing the current list first in 2015 before progressing to an extension.

Apart from a rejection by a majority of members, including the US, the proposal also failed to gain support from fellow producers of the commodities – Malaysia, the world’s second-largest palm oil producer and second-largest rubber producer, and Thailand, the world’s top rubber supplier.

While acknowledging that Indonesia’s approach was on a “long and winding road”, Amin Subekti, an executive of Indonesia’s APEC Business Advisory Council (ABAC), said local business groups would continue pushing for the inclusion of agricultural products on the green list.

The support for the proposal is based on the view that Indonesia’s agro-based products, such as palm oil, rubber, pulp and paper, contribute to green growth and sustainable development as at present, local business stakeholders are struggling to cope with surging demand from customers, tighter business competition and compliance with sustainability standards.

“This kind of awareness is what we’re trying to bring into APEC to generate a common understanding on the issue,” Amin said.

The agriculture sector, driven largely by the cultivation of plantation commodities like palm oil and rubber, accounts for 20 percent of the gross domestic product (GDP) of Southeast Asia’s largest economy and employs around 40 percent of the nation’s workforce.

The APEC green goods list is dominated by manufactured goods produced by developed economies plus China and includes renewable and clean-energy technologies such as solar panels, gas and wind turbines with tariffs as high as 35 percent and wastewater treatment technologies, for instance filters and ultraviolet disinfection equipment, with duties as high as 21 percent.

Although it is still debatable which APEC members can reap the most benefits from the agreement, the competitive edge will be held by countries with more advanced technological capacities, thereby excluding most developing economies like Indonesia. (Linda Yulisman)