Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices

The document examines the strategic palm oil trade relationship between Indonesia and China, identifying systemic barriers to sustainability and proposing a framework for a deforestation-free value chain.

• Palm oil is a critical component of Indonesia-China bilateral trade; in 2023, Indonesia exported over 4.29 million metric tons (MMT) of palm oil to China, valued at $3.88 billion, representing approximately 20% of Indonesia's total exports to China.
• Indonesia and Malaysia dominate global production, contributing over 83% of the world's palm oil, with Indonesia alone accounting for over 50%. China is the second-largest global importer, sourcing 94% of its palm oil from imports, with 76% coming from Indonesia and 24% from Malaysia.
• Significant supply-side barriers exist in Indonesia, where smallholders manage 41% of plantations but fewer than 3% are formally registered or certified. Traceability is further compromised by unregulated “mini-mills” that source from unregistered farmers.
• The certification landscape is fragmented and costly; Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) lack universal global recognition, and RSPO certification can cost smallholder groups up to $15,000 annually.
• Demand-side constraints in China include high price sensitivity and a lack of market premiums for certified sustainable palm oil, as processors often prioritize cost over certification during soybean shortages.
• The document proposes three strategic next steps: facilitating bilateral trade through mutual recognition of standards (ISPO/MSPO) and data interoperability; mobilizing blended finance, green bonds, and credit guarantees for smallholders; and launching jurisdictional pilots pairing producing regions like Riau and West Kalimantan with Chinese hubs like Tianjin and Shanghai.

APA

World Economic Forum (2025). Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices. https://reports.weforum.org/docs/WEF_Strengthening_Indonesia_China_Palm_Oil_Trade_with_Sustainable_Practices_2025.pdf

Chicago

World Economic Forum. Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices. 2025. https://reports.weforum.org/docs/WEF_Strengthening_Indonesia_China_Palm_Oil_Trade_with_Sustainable_Practices_2025.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices |date=June 2025 |url=https://reports.weforum.org/docs/WEF_Strengthening_Indonesia_China_Palm_Oil_Trade_with_Sustainable_Practices_2025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2025strengthening, author = {{World Economic Forum}}, title = {{Strengthening Indonesia-China Palm Oil Trade with Sustainable Practices}}, institution = {World Economic Forum}, year = {2025}, month = jun, url = {https://reports.weforum.org/docs/WEF_Strengthening_Indonesia_China_Palm_Oil_Trade_with_Sustainable_Practices_2025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }