Indonesia Expects EU to Adjust Palm Oil Biofuel Stance After EU Ruling 

 

Indonesia welcomed a ruling by the World Trade Organization in a case against European Union on palm oil-based biodiesel, expecting the bloc to adjust its regulations to comply with the ruling. 

 

The world's largest palm oil producer Indonesia brought the case to the WTO dispute body in 2019 after the EU decided that palm oil-based diesel would not be considered a biofuel due to its link to deforestation and its use in transport fuel would be phased out between 2023 and 2030. 

 

Indonesia argued that the EU is using climate issues as a pretext to implement protectionist trade measures. 

 

"The Indonesian government welcomes the WTO panel decision ... We hope that in the future, other trading partner countries will not implement similar policies that have the potential to hinder the flow of global trade," Trade Minister Budi Santoso said in a statement late on Thursday. 

 

The three-person panel ruled last week that the underlying logic of the EU measures to limit greenhouse gas emissions was legitimate and that the EU had a reasonable basis to designate biodiesel from palm oil as "high risk". 

 

However, the panel found fault in the way the EU had prepared, published and administered its measures, such as by not having a timely review of data to determine high risk and not meeting certain transparency obligations. 

 

The EU was also found giving less favourable treatment to palm oil-based biofuel from Indonesia than accorded to like products of EU origin or imported from third countries. 

 

The Indonesian trade ministry said that EU will be compelled to adjust its policy to comply with the ruling, adding that Indonesia will closely monitor EU's regulatory changes to meet with the WTO body's recommendations. 

 

The EU embassy in Jakarta did not immediately response to a request for comments. 

Source: Reuters 

Exports Grow 2% in 2024 Despite Plunge in Coal, CPO Shipments  

 

Several quite minor export goods happened to see significant growth in 2024 and managed to compensate for a portion of the declines in Indonesia's main export commodities. 

 

Overall exports grew by 2.29 percent year-on-year (yoy) last year despite drops in Indonesia’s three largest export contributors, as the country received boosts from minor commodities.  

 

Some US$264.7 billion worth of goods were exported last year, up from the $258.7 billion the year before, Statistics Indonesia (BPS) data show.  

 

“If we review it by sector, then the increase in non-oil-and-gas export value throughout 2024 mainly happened in the manufacturing sector and the agricultural sector,” said BPS interim head Amalia Adininggar Widyasanti on Wednesday.  

 

Indonesia’s exports are supported in large part by coal, iron and steel, as well as crude palm oil (CPO) and its derivatives, which make up close to 40 percent of the country’s total exports.  

 

Exports of CPO and its derivatives, however, fell 11.7 percent in value and 17 percent in volume last year from the 2023 figures.  

 

Coal, the country’s staple export commodity, saw a double-digit drop in export value, despite a 26 million tonne increase in volume in the same period.  

 

Iron and steel saw a 3 percent yoy drop in value, but grew 18 percent yoy in volume. 

 

Separately, Amalia of BPS told The Jakarta Post on Wednesday that several quite minor export goods happened to see significant growth in 2024 and managed to compensate for a portion of the declines in the main export commodities.  

 

Among them are, cocoa, precious metals and products made from iron, steel, nickel and copper, with each contributing between 1 and 3.5 percent of the entire non-oil-and-gas export pie.  

 

Cocoa exports, for instance, grew by a whopping 118 percent yoy, while copper and nickel products saw over 51 percent yoy and 17 percent yoy growth, respectively.  

 

BCA chief economist David Sumual told the Post on Wednesday that while such products made up a small share of total exports, they had made a big contribution to 2024’s export increase, thanks in part to Chinese demand.  

 

“The rest were cocoa and tea, gold and copper. They were propped up by price increases,” said David.  

 

Imports, on the other hand, grew 5.31 percent to $233 billion in 2024, bringing the country’s yearly trade balance to a surplus of $31 billion.  

 

Indonesia has sustained a yoy trade surplus in annual terms since March 2020, but after a peak in 2022 resulting from a commodities boom, the figure began creeping downward. 

 

The 2024 trade balance marked a decline from 2023’s $36.93 billion surplus. 

 

Indonesia’s largest bilateral trade surplus in 2024 was with the United States, which purchased $16.8 billion more in goods from Indonesia than it sold to the country, followed by India and the Philippines with bilateral trade balances of $15.3 billion and $8.8 billion, respectively. 

 

In statements on Wednesday, private lender Bank Danamon economist Hosianna Evalita Situmorang cautioned that Donald Trump’s return to office “could revive trade tensions and protectionist measures” that would disrupt global supply chains and raised the possibility of “flat” commodity prices throughout 2025.  

 

Despite the challenges, Hosianna projected that Indonesia’s trade balance would remain “stable” this year.  

 

Private lender Bank Permata chief economist Josua Pardede said in an analysis on Wednesday that Trump’s inward-looking economic policies would be a key factor to monitor in 2025, adding that they might “exacerbate already challenging global trade and growth conditions” by triggering trade and currency wars.  

 

With Indonesia’s narrower 2024 trade surplus, it may see a wider current account deficit for the year.  

 

Josua projected that the current account deficit would be 0.69 percent of GDP for 2024, up from 0.1 percent of GDP in 2023. 

 

Source: The Jakarta Post 

Indonesia Officially Adopts 15% Global Minimum Tax 

 

The Indonesian government has officially adopted a global minimum tax rate of 15 percent to foster a healthier and more competitive investment climate, a senior official announced on Thursday. 

 

The global minimum tax aims to ensure that large multinational corporations pay a minimum level of tax in every country where they operate, according to the Organization for Economic Cooperation and Development (OECD). This measure seeks to reduce profit-shifting practices and end the "race to the bottom" on corporate tax rates. 

 

Indonesia's implementation of this tax is outlined in a regulation signed by the finance minister on December 31, 2024. 

 

“This regulation will prevent tax evasion practices through operations in tax havens. We welcome this scheme as a significant step toward creating a fairer global taxation system,” said Febrio Nathan Kacaribu, Head of the Finance Ministry’s Fiscal Policy Board. 

 

The initiative was spearheaded by the Group of 20 (G20), of which Indonesia is a member, and introduced globally by the OECD with support from over 140 countries. To date, at least 40 nations have implemented the global minimum tax. 

 

The tax applies to multinational corporations with consolidated global revenues of at least 750 million euros. 

 

“This scheme does not apply to individual taxpayers or micro, small, and medium enterprises (MSMEs),” Febrio added. 

 

Multinational corporations must pay the global minimum tax within 15 months after the end of the fiscal year in which the tax report is submitted. However, taxpayers will have an extended deadline of 18 months for the inaugural year. 

 

“The adoption of the global minimum tax by countries worldwide marks a significant milestone in reforming the global taxation system to become more inclusive and supportive of sustainable economic growth,” Febrio said. 

 

Source: The Jakarta Globe