The 19% import tariff is not seen as a major threat to the palm oil industry. Producers remain confident that Indonesia’s crude palm oil (CPO) exports to the United States will stay attractive even after the 19% tariff takes effect on August 7, 2025.
Eddy Martono, Chair of the Indonesian Palm Oil Association (GAPKI), said Indonesia is relatively fortunate because the duty, initially planned at 32%, was lowered to 19%. Even so, GAPKI hopes the government will continue negotiating with the U.S. to reduce the import tariff to 0%.
GAPKI data show steady U.S. demand over the past five years: exports rose from 1.5 million tons in 2020 to 2.5 million tons in 2023, before easing slightly to 2.2 million tons in 2024. Export value last year stood at US$2.9 billion, giving Indonesia an 89% market share in the U.S. palm oil market.
“Palm oil is a primary input for the U.S. food industry, such as margarine, that cannot be replaced by other vegetable oils,” Eddy told SUAR on August 5, 2025.
“Palm oil is a primary input for the U.S. food industry—such as margarine—that cannot be replaced by other vegetable oils,” Eddy said.
Diversifying Markets Is Essential
Palm oil producers cannot rely solely on existing markets amid rising global uncertainty. GAPKI Chairman Eddy Martono underscored the need for diversification, particularly to anticipate further trade tensions that could affect key destinations such as China and the European Union.
“Latin America and Africa are alternative markets we are exploring,” Eddy said.
He also voiced concern over the risk of a global recession that could dampen export demand more broadly, stressing the importance of a strategy that is not merely reactive to the U.S., but anticipatory of global dynamics.
Case in Point: Astra Agro Lestari’s Resilience. PT Astra Agro Lestari Tbk (AALI) delivered strong results in the first half of 2025, posting significant gains in both revenue and net profit. As of June 30, 2025, net profit jumped to Rp 702.12 billion—up 40.13% year-on-year from Rp 501.04 billion in the same period last year—lifting basic earnings per share to Rp 364.80 from Rp 260.32.
“This profit growth aligns with net revenue, which surged 40.05% year-on-year to Rp 14.44 trillion, from Rp 10.31 trillion in H1 2024,” President Director Djap Tet Fa said in an official statement received by SUAR on August 5, 2025.
For AALI, sales of crude palm oil and its derivatives remain the backbone of revenue, rising from Rp 9.63 trillion to Rp 12.81 trillion. Palm kernel and derivative sales also jumped sharply to Rp 1.60 trillion from Rp 643.60 billion, while other income contributed Rp 22.16 billion.
A Pillar of the Economy—Amid Complex Challenges
Indonesia is the world’s largest producer and exporter of CPO and the second-largest producer of coconuts. The palm oil industry plays a vital role in the national economy—not only as the largest non-oil-and-gas foreign-exchange earner, but also as a source of livelihoods for millions of workers.
The palm oil industry has long played a vital role—not only as a leading foreign-exchange earner, but also as a source of livelihoods for millions of workers.
Most Indonesian CPO products are exported to countries such as India, China, and the European Union. Yet the industry faces complex headwinds, particularly environmental concerns.
Land clearing for oil palm cultivation is often criticized for driving deforestation and the loss of forest habitats.
At the same time, shifting geopolitics and trade policies in destination markets affect the stability of Indonesia’s CPO exports—compelling industry players to adapt continuously and seek out alternative markets.
Pushing ISPO Certification
The government, as regulator, is moving to strengthen its commitment to sustainable palm oil management through a series of strategic measures—chief among them Presidential Regulation (Perpres) No. 16 of 2025.
The regulation marks a key step in expanding the coverage and reinforcing the system of Indonesian Sustainable Palm Oil (ISPO) certification.
Ratna Sariati, Head of the Substantive Group for Implementation and Quality Supervision of Plantation Products at the Ministry of Agriculture, emphasized that ISPO is more than a label. It is a comprehensive system ensuring that palm oil operations are economically viable, socially and culturally responsible, environmentally sound, and compliant with prevailing laws and regulations.
“ISPO certification is written proof that estate management meets these sustainability principles—thereby supporting the continuity of exports,” she told SUAR recently.
The legal basis for ISPO refers to Law No. 39 of 2014 on Plantations, particularly Articles 2, 3, and 62.
Implementation was set out in Perpres No. 44 of 2020, now updated by Perpres No. 16 of 2025. The revision expands the scope from upstream to downstream, including the processing industry and bioenergy.
As a result, responsibility for ISPO no longer rests solely with the Ministry of Agriculture; it also involves the Ministry of Industry for downstream sectors and the Ministry of Energy and Mineral Resources for bioenergy.
