KL better in tapping CHina's CPO market

Adianto P. Simamora, The Jakarta Post, Jakarta

Indonesia has failed to compete with Malaysia in penetrating China's promising crude palm oil (CPO) market due to poor marketing efforts, the Indonesian Palm Oil Producers Association (Gapki) said on Wednesday.

Gapki's chairman Derom Bangun warned that Indonesia would lag further behind Malaysia in the Chinese market, if local producers did not immediately take actions to boost marketing efforts in the world's most populous nation.

Derom said that unlike Malaysian producers, who are aware of the importance of marketing efforts, Indonesian producers are "production-minded" rather than "marketing-minded".

"Indonesia will face difficulties in increasing its CPO export to China if local producers are unwilling to change their production oriented thinking," Derom told The Jakarta Post in Jakarta on Wednesday.

He urged local producers to spend more capital on promotion of their CPO products abroad.

"The CPO market has been saturated, unlike several years ago. So we have to be more active in promoting our products and taking new potential markets," he said.

Describing the aggressive marketing campaign conducted by Malaysia in China, Derom said Malaysia had two marketing representative offices in China, one established by the association of Malaysian palm oil producers and the other by the Malaysian government.

"Indonesia, meanwhile, has nothing there. We are very ineffective in marketing," he said.

Indonesia has only sent one trade delegation to China early this month, consisting of CPO producers and government officials, as part of marketing efforts in China, Derom said.

According to Derom, Malaysia expects to export 900,000 tons to China this year, while Indonesia's exports are projected to reach only 450,000 tons. Last year, Indonesia exported a total of 450,000 tons to China.

Indonesia is the second largest CPO producer in the world with an annual output of 7.2 million tons, while Malaysia is the largest with an annual output of 10.8 million tons.

"I have received information that China will raise its import quota to 1.8 million tons of CPO in 2002, from 1.4 million tons this year. The quota will be further raised to 2.2 million in 2003 and 2.6 million in 2004," he said.

Derom said during the trade mission to China, the Indonesian delegation met with about 300 Chinese businessmen.

"They (Chinese businessmen) are actually very enthusiastic about Indonesian CPO products but they voiced concerns about the quality. That's why, we need to be more proactive," he said.