04-05 Aug, 2016 - Yogyakarta, INDONESIA
Grand Aston Yogyakarta
Grand Aston Yogyakarta
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In its attempt to crack down on the oil palm industry, whose uncontrolled expansion has been blamed for contributing to severe haze, Indonesia has rejected applications from 61 companies for new oil palm operations. It was not disclosed which companies had their applications rejected, nor if the applications were for new plantations or expansions to existing plantations.
As a result of the decision, almost one million hectares of land have been spared from conversion to oil palm plantations.
"We want to save our forests - development should continue - but we can't let it destroy our environment," said Mr San Afri Awang, a senior official from the Environment and Forestry Ministry. President Joko Widodo has also told planters to increase their yields by using better seeds, rather than expanding into new areas.
The oil palm industry has been blamed for starting uncontrolled forest fires with illegal slash-and-burn tactics. Last year was the worst so far, with large areas of South-east Asia covered in toxic smog, causing tens of thousands to fall ill and leading to flight cancellations and school closures.
Greenpeace Indonesia forest campaigner Kiki Taufik welcomed the move but said the government must ensure that the local authorities enforce the decision.
"Often these companies are rejected by the central government but then they start lobbying the regional government," he said.
Implementation of laws is difficult in the country due to heavy decentralisation of power across the archipelago of more than 17,000 islands, with rules set in Jakarta often flouted by local administrations.
Find out more about how Indonesia is driving sustainability measures in its oil palm industry, at CMT’s 8th ASIA Sustainable Oil Palm Summit on 4-5 August in Yogyakarta.
01 Jul, 2016
According to a Fitch report, Crude Palm Oil prices are set to increase this year, as global demand holds up and output falls in Indonesia and Malaysia because of the dry weather conditions caused by El Nino. The expected pre-export tax and levy CPO price range is between $650/tonne and $700/tonne.
Malaysia’s output declined to an 18-month low of 1.04 million tonnes in February, while Indonesia also forecast a reduction in output this year – the first annual fall in production in at least 15 years.
As Indonesia’s domestic consumption is likely to increase substantially, this should bolster global prices because less CPO is available for export. The Indonesian government has raised palm oil content in biodiesel to 20% this year; the blending rate was 15% in 2015 and 10% before that. Last year, the government imposed a flat export levy of $50/tonne of CPO and $30/tonne of processed palm oil products. Should the government's reference price rise above $750/tonne, the levy will still apply, but the total amount an exporter pays will not exceed the applicable export tax. The export levy is meant to compensate for loss of export tax revenues, should the CPO reference price fall below USD750/tonne, and makes it more attractive for Indonesia-based CPO firms to cater to the domestic market.
Higher prices will benefit producers as they will result in higher operating cash flows and improve CPO firms' credit profiles. However, as CPO prices are dependent on both industry supply-demand dynamics and the global economic environment, a renewed or sustained downturn in crude oil prices would likely be a drag on CPO prices.
Learn more about the latest trends and outlook on Palm Oil prices from analyst David Ng at the 16th Asia Coatings Markets on 4-5 Aug in Bangkok.
06 Jun, 2016
In line with the drive towards sustainability, world’s largest palm oil producer – Indonesia will soon initiate a moratorium on new palm oil concessions.
This was mentioned by the country’s President Joko Widodo – seen as a move to step up Indonesia’s measures to reduce palm oil sector's impact on the environment.
Indonesia has come under international ire for its annual "haze" that is caused by forest-clearing for palm and pulp plantations as well as peatland fires.
The President has stressed that palm oil growers need to utilize the land already issued to them. He added that the current area could be more than twice as productive "provided they use the right seeds".
With the moratorium, palm oil growers will no longer get concessions for palm oil mining.
Besides this, there are also other initiatives taken to ensure sustainability in the palm oil sector – major palm oil producers – including Wilmar International, Cargill Inc and Golden Agri Resources signed the Indonesian Palm Oil Pledge in 2014.
However, this pledge to cut deforestation was viewed as too stringent for smallholders in Indonesia who contribute as much as 40 percent of the country’s palm output.
More on sustainable measures in the palm oil sector will be discussed at 8th ASIA Sustainable Oil Palm Summit on 4-5 August, 2016 in Yogyakarta.
For more information, contact Ms. Hafizah at hafizah@cmtsp.com.sg or call +65 6346 9218.
09 May, 2016
