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INDONESIA’S ECONOMIC DIPLOMACY IN THE CONTEXT OF THE EU’S PALM OIL
EMBARGO: REACHING OUT TO TURKEY AS AN ALTERNATIVE MARKET
IQBAL RAMADHAN
iqbal.ramadhan@universitaspertamina.ac.id
Graduated from Bachelor and Master Degree from International Relations Department
Universitas Padjadjaran, Indonesia. Currently working as a permanent lecturer at International
Relations Department Universitas Pertamina (Indonesia). Iqbal has interest on Middle East and
North Africa Studies, Security Studies especially in Cyber Security, Diplomacy and Foreign Policy
Analysis. Iqbal is continuing his study at Doctoral Program at International Relations Department
Universitas Padjadjaran. Iqbal was one of researcher who was involved in Indonesia Palm Oil
Diplomacy, a joint research between Universitas Pertamina and Indonesia Ministry of Foreign
Affairs. Iqbal has published many articles on Indonesia’s reputable scientific journal and
international publication indexed by Copernicus and Scopus.
RAHMADHA AKBAR SYAH
rahmadhaakbar@gmail.com
Graduated from Bachelor Degree program at International Relations Department Universitas
Pertamina. Alongside with Iqbal Ramadhan, Rahmadha was one of student who participated in
Indonesia Palm Oil Diplomacy, a joint research between Universitas Pertamina and Indonesia
Ministry of Foreign Affairs (Indonesia). Rahmadha is an independent researcher.
ZAKI KHUDZAIFI MAHMUD
work.khudzaifi@gmail.com
Graduated from Bachelor Degree program at International Relations Department Universitas
Pertamina. Zaki is currently working as an embassy staff (Indonesia) at Indonesian Embassy at
Paramaribo, Suriname. He is also a master student at Communication Studies Department,
Universitas Indonesia. He has done multiple research in security studies and defense diplomacy.
Abstract
Turkey was chosen as an alternative market by the Indonesian government after an embargo
from the European Union, as Turkey has a high demand for palm oil from its food and
oleochemical industries. In the energy sector, biodiesel extraction material can also not meet
the needs. These are solid reasons for the Indonesian government to penetrate economic
diplomacy through the Consulate General in Istanbul. In dissecting the performance of the
Indonesian Consulate General in Istanbul, this research uses a qualitative method and
economic diplomacy theory. This study found that the typology of Indonesia's economic
diplomacy (2019) is more developed than it was in previous years.
Keywords
Palm Oil; Economic Diplomacy; Indonesia; Turkey; Trade
Resumo
A Turquia foi escolhida como mercado alternativo pelo governo indonésio após um embargo
da União Europeia, uma vez que a Turquia tem uma grande procura de óleo de palma para
as suas indústrias alimentares e oleoquímicas. No sector da energia, o material de extracção
de biodiesel também não satisfaz as necessidades. Estas são razões sólidas para o governo
indonésio entrar na diplomacia económica através do Consulado Geral em Istambul. Ao
dissecar o desempenho do Consulado Geral Indonésio em Istambul, esta investigação utiliza
um método qualitativo e a teoria da diplomacia económica. Este estudo concluiu que a
tipologia da diplomacia económica da Indonésia (2019) está mais desenvolvida do que nos
anos anteriores.
Palavras-chave;
Óleo de Palma; Diplomacia Económica; Indonésia; Turquia; Comércio
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Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
317
How to cite this article
Iqbal Ramadhan, Iqbal; Syah, Rahmadha Akbar; Mahmud, Zaki Khudzaifi (2022). Indonesia’s
Economic Diplomacy in the Context of the EU’s Palm Oil Embargo: Reaching Out to Turkey as an
Alternative Market. Janus.net, e-journal of international relations, Vol13 N2, November 2022-April
2023. Consulted [online] in date of last visit, https://doi.org/10.26619/1647-7251.13.2.13
Article received on 11 December de 2020, accepted for publication on 18 March 2022
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
318
INDONESIA’S ECONOMIC DIPLOMACY IN THE CONTEXT OF THE
EU’S PALM OIL EMBARGO: REACHING OUT TO TURKEY
AS AN ALTERNATIVE MARKET
IQBAL RAMADHAN
RAHMADHA AKBAR SYAH
ZAKI KHUDZAIFI MAHMUD
1. Introduction
For various reasons, the Indonesian government must confront the prohibition of palm
oil exports to the European Union. The vast expansion of palm oil plantations across 25
provinces and over 200 districts in Indonesia is a simple way of showing how impactful
palm oil is for Indonesia. Indonesian Palm Oil Association (GAPKI) (2017) disclosed that
palm oil has contributed to the regional development, and it can be seen through palm
oil’s multiplier output reaching the value of 1.71, indicating that the output of palm oil
is 1.71 times greater than the average value of other economic sectors. Palm oil also
creates a more excellent employment opportunity by 2.6 greater than other sectors.
Another thing to add is that the palm oil industry in Indonesia has been known for its
inclusivity in terms of employment; as the result of labor-intensive plantation technology,
thereby opening up employment opportunities for many sectors of expertise. More than
67% of the workforce education is below high school (GAPKI, 2018). Although palm oil
has a large enough role to contribute to the first SDG’s point the No Poverty- the
European Union has different angles on seeing Indonesian palm oil. In January 2018, the
European Union Parliament supported the European Commission's announcement that
palm oil in the form of biodiesel would be prohibited from entering the European continent
beginning in January 2021. The European Commission believes that the Indonesian
government's palm oil production is incompatible with the Renewable Energy Directives
(RED), which seeks to prevent deforestation and peatland degradation (Verdinand,
2019). Internationally, Indonesia has been chastised for the development of its palm oil
industry, which has always resulted in social and environmental conflicts. For example,
the state of peatlands in Indonesia is debatable because they are frequently converted
into oil palm production areas. Peatland clearing is frequently burned, resulting in a
smoke haze that can potentially interfere with health problems and threaten biodiversity
(Astuti, 2021).
Another issue still being debated in many countries is the standardization of Indonesian
palm oil. The ISPO (Indonesian Sustainable Palm Oil) standard in Indonesia contradicts
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e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
319
the RSPO (Roundtable Sustainable Palm Oil) standard. According to the RSPO standard,
oil palm production must collaborate to prevent deforestation. Meanwhile, the ISPO
standard has received domestic and international criticism (Choiruzzad, Tyson and
Varkkey, 2021). The European Union is concerned not only with environmental issues
but also with the social consequences of oil palm production, such as poverty, land
conflicts, and the erosion of indigenous peoples' social rights (Delabre and Okereke,
2020). However, palm oil is Indonesia's most important commodity. As a result, the
Indonesian government is attempting to find new market share alternatives for selling
palm oil. When it comes to banning palm oil from the European Union, we must first
examine how this export commodity is produced in Indonesia. Sumatra and Borneo are
the two Indonesian islands with the highest concentrations of palm oil production. Palm
oil production from these two islands accounts for approximately 55% of global palm oil
production. Indonesia contributed 38.17 million tons of the total global palm oil trade of
58.9 million tons (Suwarno, 2019). Palm Oil Agribusiness Strategic Policy Institute
(PASPI) showed that the value of transactions produced by urban areas that are
marketed from the community of oil palm plantations (including farmers and employees
of oil palm plantations) reached Rp 336 trillion/year (GAPKI, 2018). The ownership of
palm oil companies varies as well. State-owned enterprises own around 12% of oil palm
plantation producers.
Meanwhile, private companies control 53% of the palm oil management concession.
Finally, palm oil production employs approximately 35% of small and medium-sized
businesses and is considered the bread and butter for around 19.5 million Indonesians
(Larsen et al., 2014; Soraya, 2019). According to data from the Indonesian National
Statistics Agency, India is the primary destination for palm oil exports, accounting for
29% of total Indonesian palm oil exports. China is the second-largest importer of palm
oil from Indonesia, accounting for 11% of total trade. It was followed by the Netherlands
(9%), Malaysia (5%), Singapore (4%), Egypt (3%), and Germany (2%) (Ridwannulloh
and Sunaryati, 2018). The European Union imports 7.2 million tons of palm oil, with
Indonesian palm oil accounting for roughly 60% of this total (Kurniati, 2020). Regarding
the EU's palm oil requirements, the region consumes 27% of total vegetable oil. To
counter the EU’s move to ban Indonesian palm oil from entering their market, Indonesia
had to find a new alternative market. Turkey is one of the potential and feasible
alternative countries for palm oil market share. Turkey's population continues to grow
yearly and is supported by the high consumption of vegetable oils.
According to Suhaili (2015), Turkish vegetable oil consumption per capita in 2013 was
32 kg, 5 kg higher than the average global community. Consumption continued to rise
and touched 2.48 million tonnes in 2014, almost 75,000 tonnes higher than the total
consumption in 2013. Although Turkey is also considered a producer of vegetable oils,
such as sunflower seeds and cottonseed, domestic production remains inadequate to
meet its domestic vegetable oil demands. Suhaili (2015) explained that domestic
production in 2014 was around 1.65 million tonnes, while consumption reached 2.47
million. Therefore, Turkey still needs to import more than 1.5 million tonnes of vegetable
oil and fat annually. This enormous consumption is partly due to their use as a mixture
for food and oleochemical industries. In addition to the food sector, the Turkish
government is currently working to promote the use of biodiesel in an effort to improve
the country's energy security. Eryilmaz et al. (2016) explained that at least Turkey must
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e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
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import 3.5 million tonnes of sunflowers and spend around 3.75 million dollars per year
since the establishment of the biodiesel proliferation program.
Currently, there have not been any existing free trade agreements between Indonesia
and Turkey. According to an official press release issued by the Indonesian Ministry of
Trade, the two countries are still in the negotiation stage of the Indonesia-Turkey
Comprehensive Economic Partnership Agreement (IT-CEPA). This agreement is in its
fourth phase and covers commodity trading agreements. Indonesian exports to Turkey
totaled $1.81 billion, with a surplus of $639.9 million (Ministry of Trade Republic of
Indonesia, 2019a). Turkey's position is quite strategic for Indonesia because, besides
being an important trade partner, Indonesia sees Turkey as the main route to enter the
Middle East, Southern Europe, and North Africa markets.
Meanwhile, Malaysia, Indonesia's main competitor in the palm oil industry, already has a
free trade agreement with Turkey; Indonesia faces enormous challenges in entering the
Turkish market (MITI, 2015). Malaysia can market its commodity products at lower tariffs
thanks to the free trade agreement. In 2019, according to (Trade Map, 2019), the share
of Turkey's palm oil import market came from Malaysia with a total of 94.6%. On the
other hand, Indonesia is determined to enter Turkey's market to trade its palm oil
commodities. Therefore it is interesting to understand how the Indonesian government
is eager to penetrate the Turkish market without the help of free trade agreements,
relying on the fate of one of their most essential commodities solely on economic
diplomacy efforts through its consulate general in Istanbul. Hence, the authors suggest
a research question: How has Indonesia government develop its palm oil
economic diplomacy towards Turkey?
2. Literature Review
The researchers have compiled several previous studies that summarized Indonesia's
diplomacy on the issue of oil palm. The purpose of searching previous research is to find
novelty in scientific work (Creswell, 2014). According to Creswell (2014), the steps in
looking for previous research are to look for differences in aspects of topics, problems,
theories, methodologies, or research scopes. One previous study on the palm oil issue
discussed the role of the World Trade Organization (WTO) in mediating disputes between
Indonesia and the European Union (Sylvana et al., 2020). When the European Union
imposed a ban on palm oil imports into Europe, the Indonesian government took the
issue to the multilateral level, enlisting the WTO as a mediator. The WTO's involvement
is critical for the Indonesian government because it has an organizational chart tasked
with problem-solving, namely the Dispute Settlement Body (Sylvana et al., 2020). The
other two studies address the issue of oil palm problems due to state policy. The first
study chastised the Indonesian Standard Palm Oil (ISPO) certification for failing to adhere
to the Roundtable on Sustainable Palm Oil (Choiruzzad, Tyson and Varkkey, 2021).
Meanwhile, subsequent research explains how the Indonesian government balances the
need for oil palm production with the restoration of peatlands. Oil palm production
frequently intersects with clearing peatlands via forest fires (Astuti, 2021). Three studies
explain the relationship between economic diplomacy and the issue of oil palm in the
context of the concept of economic diplomacy. The first study describes the European
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
321
Union's economic diplomacy efforts to prohibit importing Indonesian palm oil. The
European Union aims to integrate economic growth to reduce carbon emissions
(Verdinand, 2019). The second study describes Indonesia's economic diplomacy efforts
in response to the ban on palm oil imports by prohibiting raw nickel exports. Nickel is an
essential import commodity in Europe (el Qudsi, Kusumawardhana and Kyrychenko,
2020). Simultaneously, the third study examines Indonesia's economic diplomacy in
responding to the ban by bolstering aspects of sustainable environmental development,
biodiversity, and socioeconomic synergy (Suwarno, 2019). According to the authors
previous research, no scientific articles specifically discuss Indonesia's oil palm diplomacy
with Turkey. As a result, the author will examine how Indonesia uses economic diplomacy
to increase Turkey's palm oil market share.
3. Theoretical Framework
As a determinant of the direction of research, there must be a conceptual and theoretical
framework that can be accounted for academically with all its validity. The right concept
to analyze this research case is economic diplomacy. Economic diplomacy is strategically
significant for a country to increase its national economic capacity. The economic
diplomacy concept that will be used will refer to the analysis of trade promotion by Rana
(2007) in the Economic Diplomacy: The Experience of Developing States in Bayne and
Woolcock (2007) The New Economic Diplomacy: Decision Making and Negotiations in
International Relationship. In addition to trade promotion, Bayne and Woolcock’s (2017)
concept will also be explained regarding the importance of the involvement of the private
sector in economic diplomacy. Both concepts will identify how the Indonesian Consulate
General in Istanbul functions as an actor in Indonesia's economic diplomacy missions in
the palm oil trade sector. It is also necessary to analyze Indonesia's typology of economic
diplomacy in penetrating Turkey. These will be conducted to see the current form of
Indonesian economic diplomacy (in the first period of President Joko "Jokowi" Widodo).
The theory that is suitable to be applied is Rana and Chatterjee’s (2011) economic
diplomacy typology. Secondary data sources used in this research are various research
reports and scientific studies conducted before and various books, scientific journals, and
news relevant to the topic. Primary data also supported this research through interviews
with relevant agencies: the Assessment and Policy Office of the Ministry of Foreign
Affairs, the Consulate General of the Republic of Indonesia in Istanbul, and the
Indonesian Palm Oil Association.
3.1. Theory and Approach
Economic diplomacy scientifically studies the complex relations of diplomacy and trade,
cooperation, and ways to influence external economic policy. Rana (2007) revealed that
one of the essential things that can be done to maximize economic diplomacy is through
trade promotion activities. These activities include assisting domestic companies looking
for overseas markets, market studies, business delegation visits, participation in
international trade meetings, and buyer-seller meetings. Some steps that can be taken
are (1) Informing home business associations and individual enterprises on the primary
economic conditions in the target country - informing the economic condition of the
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e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
322
destination country to the exporter because this will be related to the level of goods
acceptance in the destination country.; and (2) Analyzing the potential markets for the
home country - In addition to the importance of analyzing market potential, potential
competitors must also be identified and analyze how their products can reach that
market.
While in Bayne and Woolcock’s (2017) analysis of the importance of the involvement of
the private sector in economic diplomacy, there is a decision-making process by the
government in economic diplomacy with seven stages of the process, namely (1) Taking
the Lead (officials and ministers); (2) External Consultation (officials and private sector
players); (3) Internal Coordination (officials and regulators); (4) Political Authority
(ministers); (5) Democratic Legitimization (legislatures); (6) International Negotiation
(officials and ministers); and (7) Ratification of Agreement (legislatures). Of the seven
stages, the focus will be on the second stage, namely External Consultation (officials and
private sector players). The private sector refers to using think tanks or consultants to
formulate economic diplomacy policies. Even though think tanks and consultants usually
do not have a role in the negotiating phase, they are as important as state actors. Table
1 below explains the typology/classifications and levels of economic diplomacy, which
will be used to see the form of Indonesian economic diplomacy.
Table 1 - Typology and Levels of Economic Diplomacy
No.
Classification
Traditional
Niche-Focused
Evolving
Innovative
1
External
Economic
Management
Handled by the trade
& economic
ministries; little
involvement of MFA
Promotion
concentrates on
the identified
niche
Some coordination
between trade and
foreign ministries;
contestation also likely
Joined-up and
other cooperative
arrangements
2
Policy
Management
Limited role for MFA,
frequent turf battles
Good internal
coordination
Inter-ministry or
cabinet-level
coordination; tending
toward improvement
Institutionalized
management,
strong teamwork
3
Role of Non-
State Actors
Episodic depends on
the personality
Variable
New procedures, vital
networking
Harmonization with
all stakeholders
4
Economic Aid:
Recipient
Handled by economic
agencies, seldom
coordinated with MFA
Limited
coordination
Networking between
the aid management
agency and MFA
‘Graduated’ out of
aid receipt, or close
to that stage
5
Economic Aid:
Donor
Unlikely to be an aid
donor
Unlikely to be an
aid donor
The modest program,
usually covers
technical cooperation
Expanding
program, run by
MFA in harmony
with trade
promotion agencies
6
Trade
Promotion
Often handled by a
commercial cadre,
outside MFA control
Limited focus on
the commercial
promotion
outside the niche
area
Cooperative
arrangements, often
the integration of
political and economic
work
Well-coordinated
activities, a role
model in a range of
activities
7
Investment
Promotion
Handled by domestic
agencies, limited role
of the diplomatic
system
Active use of
embassy network
MFAs and embassies
work actively with
home agencies, often
at the individual
initiative
Strong team effort,
based on
institutional
arrangements
8
Regional
Diplomacy
Role
Usually reactive
Focused on the
preferred niche
area
Active
Innovative
exploitation of
potential
Source: (Rana and Chatterjee, 2011).
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Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
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Out of Rana’s eight economic diplomacy classifications, five types can be identified to
refer to Indonesia's economic diplomacy activities in the Turkish market: (1) External
Economic Management related to the practical steps of the Ministry of Foreign Affairs
in collaboration with other government agencies; (2) Policy Management, which explains
the involvement of the Ministry of Foreign Affairs in the formulation of external economic
policies; (3) The Role of Non-State Actors, which emphasizes how the Ministry of Foreign
Affairs can to accommodate the role of the private sector to support economic diplomacy;
(4) Trade Promotion; and (5) Investment Promotion, which explains the extent of trade
promotion and investment promotion carried out by the Ministry of Foreign Affairs.
4. Methods
The author employs qualitative methods in scientific articles to respond to problem
formulation. Qualitative methods are commonly used in social science research to answer
a social problem using language as scientific thinking (Creswell, 2007). In International
Relations studies, the type of research used in this scientific article is a case study, which
examines interactions between states and non-states that cross sovereign boundaries.
Case study research investigates foreign policy, security studies, diplomacy, and
international political economy (Roselle, Spray and Shelton, 2019). The author employs
data collection techniques such as interviews and literature studies. The author used
structured interviews to collect primary data and a structured interview technique that
used interview guidelines as a research instrument (Creswell, 2014). Researchers will
direct informants to answer questions based on interview guidelines during structured
interviews. The authors intervied three important informants such as: Head of Intra and
Inter Europe and American Region Cooperation, Political and Trade Officer at Indonesia
Consultae General in Istanbul, and Deputy Chairman of Indonesian Palm Oil Association
(GAPKI). The authors consult journals and official documents during the literature review
to supplement their research analysis. Creswell explains that in the case of study
research, researchers can obtain secondary data in official documents, audio, video, and
journal data from databases such as Scopus, PubMed, or Dimensions (Creswell, 2014).
Embedded analysis, an analytical technique that focuses on one type of case, is used by
the author during the analysis stage (Creswell, 2007). The author will only discuss
Indonesia's palm oil economic diplomacy efforts in Turkey in this case study. In addition,
the author introduces the concept of reflectivism in this scientific article. In social
research, reflectivism means that authors can provide perspectives or views as long as
they are supported by valid data (Creswell, 2014).
5. Analysis
5.1. Indonesia’s Economic Diplomacy Efforts with Turkey
The performance of Indonesia's economic diplomacy in the context of the oil palm trade
has been quite visible in previous years. The reason is that Indonesia’s Ministry of Foreign
Affairs has begun to be active in paving the way for companies to enter non-traditional
countries. The neighboring country, Malaysia, has the Malaysian Palm Oil Board (MPOB),
responsible for developing the oil palm plantation and its industry. Funds for MPOB's daily
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Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
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activities come from using taxes on the oil palm plantations and the industry and grants
for federal government research. Drawing on Rana (2007), we argue that the Indonesian
government has chosen the Consulate in Istanbul as the main point of the economic
diplomacy efforts in Turkey because they are harnessing the collaboration between state
and private actors to achieve economic interest. Referring to Khalidi (2019), MPOB
combines the Malaysian Palm Oil Research Institute and the Malaysian Palm Oil License
and Registration Authority. While in Indonesia, export activities appear to be under
private control and have minimal government support. As a private actor, Indonesian
Palm Oil Association (GAPKI) faces difficulties when accommodating the activities of
exporters, such as tariff and non-tariff blocks. The lack of one-stop coordination causes
Indonesia's palm oil trade not to be structurally integrated within the ministerial body.
Correspondingly, there is still a perception from the government, especially the foreign
ministry, regarding "who is interested and who is going to be the buyer," causing oil palm
export activities not to go well. Support for promotional purposes is critical to maintaining
the stability of a market because this is the main character of economic diplomacy.
Economic diplomacy itself is very sensitive and reactive to market changes and
developments. In line with Odell’s (2019) analysis, economic diplomacy can fail if the
market offers more attractive alternatives than the ones we currently have in our
pockets. These alternatives can vary regarding investment value, exchange of goods and
services, transfer of knowledge and technology, export and import tariff schemes,
political support, and historical relations. Therefore, as Rana (2007) previously
mentioned, the presence of state actors is necessary to oversee export activities.
5.1.1. Trade Promotions
So what can the embassy, or the consulate office, actually do? Referring to the analysis
of Rana (2007), in The Role of Embassies chapter, it is revealed that some developing
countries interested in taking non-traditional markets will face several problems. First,
the exporting country does not have enough knowledge about the culture/condition of
the country, which will make it harder to invest. Secondly, regulations regarding
investment security and other norms designated by non-traditional markets are
challenging to understand in exporting countries. It is feared that this will lead to non-
tariff barriers. Thirdly, exporting countries do not have credibility in the eyes of importers.
According to Rana, this can give birth to a chicken-and-egg syndrome, making it
increasingly difficult to penetrate non-traditional markets. Therefore, to deal with various
obstacles, embassies and consulates must align diplomatic missions with trade promotion
activities, as written below:
a) Informing home business associations and individual enterprises on the basic
economic conditions in the target country informing the economic condition of the
destination country to the exporter, related to the level of acceptance of the goods in
the designated country.
The Indonesian Palm Oil Entrepreneurs Association has members consisting of Government-owned
plantations (state-owned enterprises [BUMN]), national and foreign private plantation companies, and oil
palm farmer cooperatives.
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Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
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b) Analyzing the potential markets for the home country This second step is essential
to see what products the host country needs. Apart from the importance of analyzing
market potential, potential competitors must also be identified, and their products
must be analyzed to reach the market. This method is used to explore the Mexican
meat market and to export tea products to Egypt.
c) Credibility is also built when home exporters and manufacturers take part in trade
shows in the target country exporters' credibility is necessary to increase the interest
of potential buyers, and this can be promoted through exhibitions. In addition, the
exhibition is also a place for knowledge transfer and supports research and
development activities for a company to strengthen its products. Therefore, it is
imperative to make the exhibition a success.
d) Permitting an exporter to hold a small buyer-seller show on the premises of the
embassy or consulate most embassies now have unique rooms (trade centers) to
organize promotional activities. Allowing companies to hold a show or an exhibition
will increase their reputation and strengthen the relationship between companies and
embassies. Rana explained that the Japanese Embassy was very active in doing this,
causing companies to understand the embassy's role fully. Moreover, the state can
also provide tariffs for exporters to carry out these promotional activities.
e) Visits by business delegations are a key method for export promotion and for FDI
mobilization Approva Srivastava in Rana (2007) explains that a neat and directed
visit will change the perceptions of a company's decision-makers. The embassy's
professionalism will be seen from the visits, usually resulting in 'one-to-one meetings,'
which lead to agreements between buyers and sellers.
At least there are two points, out of the points mentioned earlier, points a and b, which
Indonesia has done as a strategy to increase trade in the palm oil sector with Turkey.
This strategy is closely related to the Indonesian government’s economic diplomacy
efforts in promoting palm oil, precisely when the issue of the palm oil embargo is peaking.
The government, through the Indonesian Consulate General in Istanbul, is moving
quickly to conduct a so-called event of trade promotion where it was attended by around
60 Turkish entrepreneurs and speakers from Indonesia, such as the Chairperson of the
Indonesian Oleochemical Producers Association (APOLIN), who was also the
representative of GAPKI (Consulate General of the Republic of Indonesia in Istanbul,
2019). The activities carried out by the Indonesian Consulate General in Istanbul are in
line with Rana’s analysis:
a) Informing home business associations and individual enterprises of the basic economic
conditions in the target country. At this point, the Indonesian government’s economic
diplomacy scheme aligns with Rana’s (2007) analysis. Consul General Herry Sudradjat
delivered an update on the Indonesian economy and various business opportunities
and information in Indonesia, primarily as a source of import for Turkey for several
leading commodities such as rubber, tea, coffee, seafood, and textile yarn, and
forestry products. The Chairperson of APOLIN, in his presentation, also explained the
products of the Indonesian palm oil industry, which are widely imported by the Turkish
industry, as well as their environmentally friendly nature. The choice of palm oil
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 316-336
Indonesia’s economic diplomacy in the contexto of the EU’s palm oil embargo: reaching out to Turkey
as na alternative market
Iqbal Ramadhan, Rahmadha Akbar Syah, Zaki Khudzaifi Mahmud
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products in this business forum is based on the consideration that palm oil is a product
that has prospects for the Turkish market in the future. A state representative office
must inform the state of its economy so that importers know the country's potential
and exporter channels. The Indonesian Consulate General in Istanbul has also been
cooperating with several business associations or chambers of commerce that are
purely private or affiliated with the government, such as the Istanbul Chambers of
Commerce (ICC), Independent Industrialists' and Businessmen's Association
(MUSIAD), and Foreign Economic Relations Board of Turkey (DEIK).
b) Analyzing the potential markets for the home country. The lack of acceptance of
Indonesian palm oil in Turkey is none other because Malaysia has already agreed with
the Turkish government. As the leading competitor, Malaysian palm oil exports to
Turkey have experienced a considerable surge, almost 50%, accompanied by a decline
in Indonesian palm oil on the Turkish market. One way that Indonesia can take is to
immediately realize the Comprehensive Economic Partnership Agreement (CEPA),
which is expected to be a stimulus to boost Indonesia's palm oil exports. This
agreement aims to provide guarantees of legal protection to exporters and investors
from discriminatory practices or other adverse actions by the host country’s
government. Comprehensive Economic Partnership Agreement is also a very
comprehensive free trade cooperation with coverage of product liberalization in almost
all tariff posts, compared to the Preferential Trade Agreement (PTA), which only
liberalizes specific tariff posts in Indonesia's bilateral trade.
5.1.2. External Consultation (Private Sector)
The private sector is a think tank or consulting agency in formulating economic diplomacy
policies. These private sector groups are usually absent at the negotiating table but are
as important as state actors. Bayne and Woolcock (2017) also emphasized that in the
formulation of an economic diplomacy strategy, external consultation is part of the
parallel process of the body of the Ministry of Foreign Affairs, which also includes internal
consultations. The difference between internal and external consultations lies within the
involved actors. If internal consultations target other government departments (cross-
sectoral departments), external consultations focus on actors outside the government. A
department will carefully consult with the private sector to examine policies and whether
they are following market conditions or not (Bayne and Woolcock, 2017). The department
also consults with expert opinions, including academics and think tanks devoted to policy
issues.
The involvement