InfoSAWIT, JAKARTA — Indonesia has long held a strategic position in the global palm oil trade. This role is shaped not only by production volume, but also by Indonesia’s influence in steering supply trends and global vegetable oil market dynamics.
This theme emerged during the Prasasti Insight: Reshaping Indonesia’s Palm Oil Foundations in an Era of Climate Risk and Governance Standards forum.
During the discussion, Fuad Bawazier, a member of the Board of Trustees of Prasasti Center for Policy Studies, emphasized the significant weight of the palm oil industry in the global economy. With a production share of around 58.7% of global output, the sector contributes substantially to Indonesia’s non-oil and gas export earnings, valued at approximately US$ 36.1 billion annually.
“Indonesia currently controls nearly 59% of global palm oil production. This means that developments in Indonesia’s palm oil industry will largely determine the direction of the global market,” Fuad said in a press statement, Friday (6/2/2026).
Indonesia’s advantage as the world’s leading producer is closely linked to natural factors. Palm oil academic Witjaksana Darmosarkoro explained that, from an agroclimatic perspective, oil palm grows more optimally in Indonesia than in many other countries, even compared to its region of origin.
“This is a natural advantage that not all countries possess,” he said, while noting that Indonesia still competes with other major producers such as Malaysia and Brazil.
Indonesia’s dominance is also reflected in global trade. Through its membership in the Council of Palm Oil Producing Countries (CPOPC), Indonesia and Malaysia together control around 84% of global palm oil supply, underscoring their central role in maintaining global supply and price stability.
From an export perspective, the Executive Director of the Indonesian Palm Oil Association (GAPKI), Mukti Sardjono, revealed that Indonesian palm oil products have reached more than 160 countries, with key destinations including China, India, African countries, the European Union, Pakistan, and the United States.
“Growing demand, both domestically and globally, shows that palm oil remains a strategic commodity that is difficult to replace,” he said.
Despite its global dominance, the national palm oil industry continues to face structural challenges, particularly at the upstream level. Issues related to smallholder plantations, declining productivity, land legality, infrastructure constraints, and increasingly strict global sustainability standards remain critical concerns.
In response, the government and industry players are focusing on strengthening the sector’s foundations through programs such as Smallholder Palm Oil Replanting (PSR), accelerated ISPO certification, and enhanced research and development from upstream to downstream.
Closing the discussion, Prasasti Policy and Program Director Piter Abdullah stressed that the Prasasti Insight forum is part of a long-term effort to strengthen national palm oil policy direction through integrated, evidence-based dialogue capable of addressing climate risks and global governance standards. (T2)
