Bayu Krisnamurthi, President Director of the Indonesian Oil Palm Estate Fund (BPDP-KS), said total exports of palm oil and its derivatives in the first quarter of 2016 reached 7.42 million tons. It is interesting to note that 87.2 percent of this total figure (or 6.47 million tons) comprises processed palm oil products, while the remainder consists of crude palm oil (CPO), implying that the downstreaming of the palm oil sector is developing smoothly. Krisnamurthi says the imposition of export levies on CPO has managed to encourage the development of downstream industries in the nation's palm oil sector.

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Malaysia announced that it has extended its zero export tariff for crude palm oil (CPO) until the end of the year in an attempt to boost sales. Malaysian Plantation Industries and Commodities Minister Douglas Uggah Embas said that this decision is aimed at preventing a further drastic fall in CPO prices. Palm oil futures declined by about 18 percent in 2014 amid an oversupply in combination with weak global demand. Indonesia and Malaysia are the world’s top palm oil producers and exporters.

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Indonesian Trade Deputy Minister Bayu Krisnamurthi announced that Indonesian furniture, rubber and garment businesses have secured trade contracts worth USD $11.3 million with their counterparts in the USA and Canada. Most of these contracts (roughly USD 10.3 million) were sealed by US importers. Krisnamurthi stated that these deals show that international businesses have trust in Indonesian products. Moreover, the deals will have a positive impact on Indonesia’s troubled trade balance.

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Bayu Krisnamurthi, Indonesian Deputy Trade Minister, expects that domestic consumption will rise by approximately 40 percent during the holy Islamic fasting month of Ramadan, which starts on 28 June 2014, and subsequent Idul Fitri (Lebaran) celebrations. Traditionally, this period of festivities brings along inflationary pressures as consumers spend more money on food, transportation, clothes and souvenirs. Moreover, Krisnamurthi stated that the center of consumption will shift to the regions.

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Deputy Trade Minister Bayu Krisnamurthi said that the Indonesian government is preparing two strategic steps to anticipate the negative impact of the winding down of the Federal Reserve's quantitative easing program. In January 2014, the Fed's bond-buying program will be reduced from USD $85 billion to USD $75 billion per month. The two strategic steps, which will enhance financial stability in Southeast Asia's largest economy, involve the curtailing of Indonesia's current account deficit and high inflation.

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The crude palm oil business received a blow when France announced it plans to impose progressive tax on imports of crude palm oil and its derivatives. French authorities approved a bill on 21 January 2016 that will raise the import tax on palm oil from around 100 euro per ton currently to 300 euro per ton in 2017. This tariff will then be raised to 700 euro per ton in 2019, and to 900 euro per ton in 2020. Through this tax hike France aims to discourage the palm oil industry, hence curtailing global deforestation as well as to protect its citizens from the negative health effects caused by the consumption of palm oil.

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Singapore-based rubber producer Halcyon Agri Corporation Limited (HAC) will become the second-largest producer and exporter of Indonesian natural rubber after it announced to buy nine Indonesian rubber processing plants (involving USD $360 million worth of investments). HAC is an integrated producer as well as merchandiser of standard Indonesian rubber and standard Malaysian rubber, which are the most widely used grades of natural rubber in vehicle tyres manufacturing.

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Although most Asian emerging currencies strengthened on Thursday (22/05) against the US dollar due to the preliminary HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) recovering to 49.7 in May 2014 (from 48.1 one month earlier) and the Federal Reserve Minutes indicating that there will be no US interest rate hike soon, the Indonesian rupiah exchange rate continued to decline. Based on the Bloomberg Dollar Index, the currency had depreciated 0.19 percent to IDR 11,531 per US dollar by 5pm local Jakarta time.

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