General

The boom in commodity prices has allowed Indonesia, a resource-rich country, to make a lot of money recently. However, Indonesia is not immersed in joy. Indonesian President Joko Widodo said on October 19 that Indonesia is planning to "slip on the brakes" on the export of all bulk commodity raw materials. Although the Indonesian government has been restricting the export of raw materials in recent years, the emergence of the word "all" still allows The outside world was taken aback.

u3000u3000 Restricting the export of raw materials, Indonesia hopes to attract foreign investment, allowing raw materials to be processed locally, developing industries, and creating jobs. In response, Zhou Shixin, an associate researcher at the Asia-Pacific Research Center of the Shanghai Institute of International Studies, told CBN reporters that the starting point of Indonesia’s development is to develop its own economy, but in a short period of time, it may be difficult for Indonesia’s industrial base to digest these raw materials. On the contrary, it may harm Indonesia's macro economy.

u3000u3000 He hopes that when Indonesia implements this policy, it can be "moderate", such as announcing that it will no longer increase the export of raw materials, leaving room to promote the New Deal, which can also give investors, upstream and downstream companies and the international market an explanation.

u3000u3000Bauxite export may be banned next year

u3000u3000Zoko told the media during an inspection in Borneo, Indonesia on the 19th that the government is currently conducting research on the downstream industries of bulk commodities, and the long-term goal is to no longer only sell raw materials.

u3000u3000He said, “Don’t be surprised. We have had an export ban on nickel ore before. Next year, we may stop the export of bauxite, and in another year we may also stop the export of other commodities.”

u3000u3000 According to the original plan, Indonesia will ban the export of bauxite in 2023. Aluminum is an industrial metal widely used in construction and automobile manufacturing. The current imbalance between supply and demand in the international market has pushed aluminum prices to near historical highs. If Indonesia’s policy is implemented next year, the relationship between supply and demand may be further imbalanced.

u3000u3000Zoko said: “We really want to put the brakes on the export of raw materials, because there is no added value and no jobs can be created.” In addition, he added that this new policy will target “all commodities”.

u3000u3000 He also said that he is considering stopping the export of unprocessed palm oil, but he did not disclose when this policy will be introduced. On the 13th, Joko announced that Indonesia would stop exporting crude palm oil (CPO) and process it into value-added derivative products, such as cosmetics, margarine, and biodiesel.

u3000u3000Mao palm oil refers to the primary oil obtained by boiling, crushing, and squeezing palm fruit. It also needs to go through processes such as removal of free fatty acids, natural pigments and odors to obtain refined palm oil and palm salad oil.

u3000u3000 A senior Indonesian official previously stated that the country conducted its first test flight of aviation fuel containing palm oil on the 13th. Indonesia plans to commercialize this fuel and expand the use of palm oil in order to increase the use of palm oil in the country.

u3000u3000 Since the beginning of this year, palm oil prices have been rising, and Indonesia is the world's largest palm oil producer and exporter.

u3000u3000 There is a precedent for banning the export of raw materials

u3000u3000 Joko said that Indonesia must have the courage to stop the export of raw materials. If it is sued for stopping the export of raw materials, Indonesia will hire international lawyers to deal with it.

He said, "We must dare to stop exporting. Although we may be sued in the World Trade Organization (WTO), it does not matter. This is our product. This is what we want to build a factory here (Indonesia) to produce our own products. s reason."

u3000u3000 In fact, Indonesia has long banned the export of raw materials. As the world's largest producer of laterite nickel ore. After many years of policy repetition, on January 1, 2020, Indonesia finally implemented a comprehensive ban on nickel ore exports.

u3000u3000 Indonesia’s policy of banning the export of raw materials was first implemented in 2009, when Indonesian President Susilo Bambang promulgated a new mining law. The law stipulates that by 2014, only "processed" minerals can be exported, and the export of raw ores and semi-finished ores is prohibited. If mining companies want to retain their mining qualifications, they must establish processing and smelting facilities in Indonesia.

u3000u3000 But in 2014, because Indonesia had not established a corresponding industry, Susilo had to amend his own law, only requiring mining companies to have the willingness to establish a smelter in Indonesia before they can continue to export.

The increase in commodity prices this year has pushed up Indonesia’s trade surplus. The trade surplus in September was US$4.37 billion, and in August it was a record US$4.74 billion. The Indonesian rupiah continues to appreciate against this background and is expected to become Asia’s best performer this year. Currency.