Palm Oil to Rescue Indonesia’s Balance of Trade Deficit
The CoronaVirus (Covid-19) has ravaged almost every aspect during its occurrence. Especially in the field of international commodity trade, every country has a different buying power, because of the impact of the pandemic. Nevertheless, Indonesia also has been affected by the effect of the pandemic, as the recent data shows that several countries have to reduce their crude palm oil (CPO) order to Indonesia.
By the early of 2020, where it was also the beginning of the Covid-19 pandemic, several countries were recorded that they had reduced their CPO order to Indonesia. The largest cutback orders were from China, as they are one of the main customers when it comes to ordering the CPO, with a 1.96 million tons order deficit. Not only China, but Indonesia has also lost some order quantity for several other countries, such as European Union countries, Bangladesh, the Middle East, and some countries in Africa. Despite the deficit orders that impacted Indonesia as the result of the pandemic, there was also an increasing order from two countries; which were Pakistan and India.
It is recorded that more countries are reducing their order rather than those who were increasing their orders. However, the export of palm oil commodities has helped the balance of trade for Indonesia. At the end of 2020, Indonesia was recorded minus for the balance of the trade, but with the result of palm oil export, it has managed to give a positive impact on Indonesia.
Despite the fact that the pandemic has affected most of the countries in the world, Indonesia as one of the most populated countries is very optimistic to get through the obstacle. At the end of 2020, the export of palm oil commodities has contributed as much as USD 22.97 trillion, where it makes the balance trade of Indonesia at the end of 2020 as much as USD 21.27 trillion.
Therefore, with the record of exporting CPO in 2020, Indonesia is very optimistic to perform in 2021, as we are expecting more orders to be exported. This prediction will also depend on the success of the Covid-19 vaccine worldwide. The increase of export trade of various commodities will also lift Indonesia in several aspects especially in terms of the economical situation.