Palm oil exports cause the “Dutch Disease” in Indonesia

December 9, 2013 |

In Indonesia, the natural resource export business is booming at the expense of the manufacturing sector, exposing the country to volatilities in the commodity market in an epoch that resembles the “Dutch Disease” of its former colonizer. Analysts are blaming the palm oil industry for causing the shift, despite recent challenges that the Indonesian Government increase the palm oil portion in the biofuel industry from 1% to 10% for public consumption, and to 20% for power plants. The country will need to diversify its products, including its conversion processes for palm oil into biofuels, while simultaneously crafting national policy with favorable financial incentives for the downstream industry.

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