05/12/2011 (Jakarta Post) - Local businesses expect that Indonesia’s palm oil exports will maintain stable growth despite uncertainties in the global economy next year.

Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said on Friday that palm oil exports would continue to grow at a stable pace next year, driven by higher demand from India and China, the country’s biggest buyers.

He estimated that palm oil exports would rise 8.82 percent to 18.5 million tons next year.

“Demand for palm oil from India and China will remain high, driven by food-based needs. So palm oil exports will remain stable despite the crisis,” he said on the sidelines of the 7th Indonesian Palm Oil Conference in Nusa Dua, Bali.

Analysts have confirmed that the escalating risks from widespread economic turmoil abroad would not affect Indonesia’s exports to Asian countries, including China and India, which would not suffer drastic economic growth slowdowns.

Fadhil said that Indonesia also anticipated higher palm oil exports to Pakistan after it signed a preferential trade agreement (PTA) with the country recently.

“With the PTA, we will have better access to the Pakistani market and compete again with Malaysia after several years of losing our market share there following the Malaysia-Pakistan PTA in 2007,” he said.

In September, Indonesia and Pakistan inked a hard-bargained agreement on preferential trade that is scheduled to go into force in January next year.

Gapki has said that the agreement would allow Indonesia’s palm oil exports to rebound to their pre-2007 level of around US$560 million, when Indonesian palm oil had a majority share of 55 percent in the Pakistani market.

As of October, the palm oil export was around 14.2 million tons, Fadhil said, and was on track to reach around 17 million tons estimated this year.

Meanwhile, palm oil production was estimated to rise by 8.05 percent to 25.4 million tons next year from about 23.5 million tons projected this year.

Trade Ministry director general for foreign trade Deddy Saleh said that the government was trying to anticipate a possible slowdown of demand from Western Europe.

“We are looking into the possibility of having export hubs in certain areas to enter new markets around the region,” he said, citing Turkey, Serbia and Pakistan as potential locations for hubs, which would serve the South Asia and Eastern Europe and the Middle East.

Deddy said that the government would also encourage exports of palm oil based biofuel as demand for renewable energy in European countries was surging. The government has been in talks with several Italian businessmen who aim to increase exports of biofuel for power plants.

“The potential to develop our market still exists. But we keep anticipating the financial woes in the continent, which can result in declining demand for our palm oil,” he said.