Economists See Palm Oil Derivatives Expanding Non-Traditional Export Markets
Economists assess that Indonesian palm oil derivatives have the opportunity to expand non-traditional export markets amid increasing global demand for industrial raw materials and animal feed, although competitiveness will be determined by the ability to meet international trade standards.
Researcher at the Center of Reform on Economics (CORE) Indonesia Eliza Mardian said the shipment of 14,000 tonnes of palm kernel expeller (PKE), used as animal feed raw material, from Lampung to New Zealand shows Indonesia can meet the sanitary and phytosanitary (SPS) requirements of developed countries with strict biosecurity standards.
“This shipment supports market and product diversification. So far, Indonesian palm oil exports have been mostly directed to India and China. Going forward, there are considerable market opportunities in countries with high demand for high-protein feed for the dairy industry,” Eliza told ANTARA in Jakarta on Monday.
She said derivative palm oil products such as PKE, olein, and oleochemicals have relatively more resilient export prospects compared to crude palm oil (CPO) because they have more diverse uses. Eliza assessed that Sub-Saharan Africa, the Middle East, and Oceania have the potential to become non-traditional markets for Indonesian palm oil derivatives. The growth of the middle class and urbanisation in Africa and the Middle East is expected to increase demand for processed vegetable oil and animal feed, while New Zealand and Australia have livestock and dairy industries that require imported PKE supplies.
The Indonesian Quarantine Agency (Barantin) through the Lampung Animal, Fish and Plant Quarantine Office released the export of 14,000 tonnes of PKE to New Zealand with an economic value of around Rp20 billion on Friday (3/7). The shipment was carried out by a new exporter after the commodity met plant health requirements and the destination country’s regulations.
Lampung Quarantine data shows PKE exports have continued to increase. Throughout 2024, there were 172 shipments with a volume of around 569,000 tonnes worth Rp2.58 trillion. In 2025, the number rose to 184 shipments with a volume of around 1.34 million tonnes worth Rp3.12 trillion, while during January to June 2026 there have been 66 shipments with a volume of around 513,000 tonnes worth Rp1.17 trillion.
Eliza assessed this achievement as a positive signal for efforts to diversify export markets for Indonesian palm oil derivative products. However, she said this success needs to be followed by an increase in the number of exporters and expansion of exports from other regions to have a broader impact on the national trade structure. “Successes like this need to be replicated in other regions so that it becomes a structural change, not just a momentum,” she said.
Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti said the prospects for the national palm oil industry remain wide open because the commodity has more than 200 types of derivative products that can be utilised in various sectors. “The prospects for palm oil are very bright, especially since there are more than 200 types of derivative products. It can not only be processed into energy, but also pharmaceuticals, food, and various other products,” Esther said.
She said this opportunity needs to be utilised by expanding market access while ensuring Indonesian products meet the quality standards and regulations in each export destination country. Meanwhile, researcher at the Center of Economic and Law Studies (Celios) Isnawati Hidayah reminded that Indonesia cannot solely rely on its position as the world’s largest palm oil producer. Isnawati assessed that future export competitiveness will increasingly be determined by the ability to meet sustainability, traceability, and low-emission standards that are now trade requirements in many countries.
“Indonesia needs to move from exporting intermediate products to downstream products that have higher added value and technological content so that it does not continue to depend on primary commodity price fluctuations,” Isnawati said. In addition, she assessed that global trade dynamics, geopolitical fragmentation, and the increasing absorption of palm oil for domestic biodiesel programmes will affect Indonesia’s export space in the future.
Therefore, economists assess that the expansion of non-traditional markets must be balanced with increased product competitiveness and compliance with international trade standards so that exports of Indonesian palm oil derivative products can grow sustainably.
In line with efforts to expand market access, the Indonesian Quarantine Agency (Barantin) is preparing to integrate quarantine services with the Directorate General of Customs and Excise, the Ministry of Transportation, PT Pelabuhan Indonesia (Pelindo), the Ministry of Trade, and other relevant agencies to reduce export barriers and improve the efficiency of commodity flows. Head of Barantin Abdul Kadir Karding said this integration is necessary so that commodity inspections are not carried out repeatedly by multiple agencies, which can add time and logistics costs for business actors. Through an integrated service system (single submission), the process is expected to become simpler, faster, and more efficient. “We want to have one system together with all parties related to the entry and exit of goods. Whether it is Quarantine, Customs, Ports, ASDP, including Trade, we will make it one,” Karding said. He added that quarantine services must be part of efforts to strengthen national export competitiveness, so they do not become trade barriers, especially for commodities that require fast handling.