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Jakarta — Indonesia’s palm oil industry closed 2025 with a historic leap, cementing its position as the world’s largest supplier of the commodity that underpins global food, energy, and industrial markets.
According to official figures, the country’s palm oil exports generated Rp590 trillion (US$35.87 billion) in foreign exchange, a sharp increase from the previous year, while shipment volumes rose to 32.34 million tonnes, up 9.5 percent year‑on‑year.
The surge was driven by strong demand across more than 220 countries, with Pakistan, China, and Bangladesh emerging as top buyers.
Africa, long considered a secondary market, recorded the fastest growth, absorbing nearly one million tonnes more than in 2024.
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By contrast, traditional destinations such as India, the European Union, and the United States saw declining volumes, reflecting shifting trade dynamics and regulatory pressures.
Indonesia’s export basket was dominated by refined palm oil, which accounted for 22.73 million tonnes, followed by oleochemicals at 5.08 million tonnes, crude palm oil at 2.96 million tonnes, and palm kernel oil at 1.56 million tonnes.
The country’s total crude palm oil production reached 51.66 million tonnes, underscoring its unmatched scale in the global market.
“Palm oil remains Indonesia’s backbone commodity, not only for food and industry but also for state revenue,” said one senior official GAPKI , noting that the sector’s contribution to foreign exchange earnings was critical amid global economic uncertainty.
Malaysia’s Declining Volumes, Rising Earnings
Neighboring Malaysia, the world’s second‑largest producer, reported a more mixed picture.
Exports fell to 15.27 million tonnes, a 9.6 percent decline compared with 2024. Yet higher global prices helped lift export earnings to RM112.43 billion (US$24 billion), a modest 2.8 percent increase.
India remained Malaysia’s largest buyer, importing 2.66 million tonnes, or 17.4 percent of total shipments.
Kenya followed with 1.21 million tonnes, while the European Union, China, Turkey, and the Philippines rounded out the top destinations. Japan also featured prominently, taking nearly 600,000 tonnes.
Malaysia’s production stood at 20.28 million tonnes of crude palm oil, less than half of Indonesia’s output.
Analysts say the country’s reliance on traditional markets, coupled with tightening sustainability regulations in Europe, has constrained growth prospects.
A Tale of Two Giants
The contrasting trajectories of Indonesia and Malaysia highlight the diverging strategies of the two palm oil giants.
Indonesia has aggressively expanded downstream industries, boosting exports of refined products and oleochemicals, while Malaysia continues to rely heavily on crude and semi‑refined shipments.
Indonesia’s ability to diversify its markets has also proven decisive.
While India’s imports from Malaysia remained strong, Indonesia’s pivot toward Pakistan, China, and Africa helped offset declines in Western markets.
The United States, though importing less, still accounted for nearly six percent of Indonesia’s shipments.
The numbers tell a clear story: Indonesia exported more than twice Malaysia’s volume and earned nearly 50 percent more in foreign exchange.
For Jakarta, the achievement underscores the success of policies aimed at strengthening the palm oil value chain, despite persistent criticism over environmental and labor practices.
Palm oil is the world’s most consumed vegetable oil, used in everything from instant noodles and chocolate bars to biodiesel and cosmetics.
The commodity’s price swings ripple through global supply chains, affecting food inflation and energy costs alike.
Indonesia’s record exports in 2025 are likely to reinforce its dominance in the sector, but they also raise questions about sustainability.
Environmental groups continue to warn of deforestation and biodiversity loss linked to palm oil expansion, while consumer markets in Europe and North America push for stricter certification standards.
Malaysia, facing declining volumes, may need to recalibrate its strategy.
Analysts suggest greater investment in downstream industries and diversification of markets beyond India and the EU.
Without such measures, Kuala Lumpur risks ceding even more ground to its larger neighbor
As 2026 begins, both countries face a complex landscape.
Global demand remains robust, particularly in emerging markets, but regulatory scrutiny and environmental concerns are intensifying.
For Indonesia, the challenge will be to balance growth with sustainability, ensuring that record earnings do not come at the expense of long‑term ecological stability.
For Malaysia, the task is to regain competitiveness in a market increasingly shaped by Indonesia’s scale and diversification.
In the words of one industry observer: “Palm oil is no longer just about cooking oil. It is about geopolitics, sustainability, and the future of global trade. And right now, Indonesia is writing the rules.”
