Indonesia Arrests Boxship for Carrying Banned Palm Oil Exports

oil palm
Unprocessed oil palm fruit (Pixabay)

Published May 8, 2022 2:09 PM by The Maritime Executive

Indonesia is taking a ban on refined palm oil exports seriously, its navy said in a statement Saturday. On Saturday, the nation's armed forces intercepted a container ship at sea and arrested it for allegedly carrying palm oil out of the country without authorization. 

The Singapore-flagged boxship Mathu Bhum was intercepted by Indonesian Navy forces off the port of Belawan, North Sumatra on Thursday. The service claimed that the vessel was carrying 34 containers of refined, bleached and deodorized (RBD) palm oil to Port Klang, Malaysia, despite a ban on palm oil exports.

The Mathu Bhum was inspected and returned to the pier at Belawan, according to spokesman Agung Prasetiawan. The case is under investigation by the Indonesian Navy's Main Base 1 (Lantamal 1).

It was the sixth vessel that Indonesian authorities have intercepted in connection with palm oil export restrictions to date, according to the Jakarta Post.

Palm oil dominates the global trade in edible oils, and Indonesia produces nearly 60 percent of the world's palm oil supply. It exported 26 million tonnes of the product last year. Its decision to shut down exports came as a shock to global markets, especially as the Russian invasion has shut down the flow of sunflower seed oil out of Ukrainian ports. This has cut the country's sunflower oil exports in half, taking roughly three percent of the world's edible oil supply offline. At the same time, drought has impacted soybean yields in South America and rapeseed production in Canada, causing price hikes for these sources as well. 

These factors have raised the demand for Indonesia's palm oil, and exports have surged in response. This also affects the domestic price of oil in Indonesia, where palm oil has reached as high as $1.80 per liter over the past month. Indonesia plans to allow refined palm oil exports to resume when the domestic price of cooking oil falls back down to about $1 per liter.