Indonesia vs. Malaysia: Competition in CPO Exports to India

Crude Palm Oil (CPO) is the most widely consumed oil globally. Besides being inexpensive, CPO is also easy to produce and utilize, including in cosmetics. Indonesia and Malaysia are the world's largest producers of palm oil. Both countries compete to be the largest CPO exporter, with Indonesia surpassing Malaysia in 2016. However, regulations in major export destinations hinder Indonesia's international trade, including with India.

Exports of CPO and its derivatives from Indonesia to India declined from February to April 2019. Exports peaked in January 2019 at 604,210 tons. In March 2019, exports decreased by 62.4% to 194,410 tons. During the same period, Malaysia gradually increased its CPO and derivative exports to India, except for a 22.5% drop in March 2019 (equivalent to 354,650 tons). Malaysia's highest CPO export volume to India reached 539,990 tons.

(Read Databoks: [Inilah 10 Negara Tujuan Utama Ekspor CPO pada 2019](https://databoks.katadata.co.id/datapublish/2019/08/08/inilah-10-negara-tujuan-utama-ekspor-cpo-pada-2019))

The issue is that India increased CPO import tariffs to the maximum limit. Malaysia responded by leveraging the 2011 Comprehensive Economic Cooperation Agreement (CECA), which resulted in a 45% import tariff on CPO to India. This was followed by negative sentiment from the European Union towards Indonesian CPO in the European market, further worsening the situation.