Asian Nuclear Giant Suddenly Pleads with Indonesia, Requests This

Pakistan has responded to Indonesia’s new policies tightening crude palm oil (CPO) exports through Danantara Sumberdaya Indonesia (DSI) and the Domestic Market Obligation (DMO) rule. Rather than merely importing CPO, Pakistan has proposed that Indonesian crude palm oil be processed in its own refineries before being marketed to various countries. The proposal emerged amid an evaluation of trade relations between the two nations, where Pakistan’s annual CPO imports from Indonesia are valued at approximately US$4 billion (Rp 71.9 trillion). Pakistan argues that a multi-billion-dollar trade relationship should evolve beyond the mere buying and selling of raw materials into industrial cooperation that adds value for both countries. Pakistan’s Ambassador to Indonesia, Zahid Hafeez Chaudhri, stated that his country has refinery capacity ready to process CPO from Indonesia. Pakistan therefore hopes Indonesia will continue supplying CPO and consider easing export levies for such a scheme. “What we want is for Indonesia to export crude palm oil to Pakistan to be processed and refined in our refineries. Afterwards, the products would not only be marketed in Pakistan but also distributed to the Middle East, Central Asia, and Africa,” Chaudhri said during a media briefing on Friday. He argued the scheme would benefit both countries, as Indonesian CPO demand would be maintained, providing certainty for the national palm oil industry, including smallholder farmers. Processing in Pakistan could also reduce distribution costs to the Middle East, Central Asia, and Africa due to the country’s closer proximity to those markets. Pakistan stressed that the proposal is not intended to disrupt Indonesia’s downstreaming policy but to build a complementary supply chain. The cooperation is also expected to enhance bilateral economic relations, as both countries are currently negotiating an upgrade from a Preferential Trade Agreement to a Comprehensive Economic Partnership Agreement, with negotiations targeted for completion next year. For Pakistan, Indonesian palm oil supply is crucial for maintaining food security amid global food price uncertainty. The Pakistani government also stated its readiness to provide various incentives to Indonesian companies or state-owned enterprises wishing to invest in the palm oil processing sector, including fiscal incentives and easier access to logistics ports.