The Impact of the European Union’s Palm Oil Resolution Policy on the Indonesian Economy Sector

Abstract

Indonesia as the  world's largest producer and  consumer of palm  oil is experiencing  considerable  challenges   due to the  enactment of the  The European Union (EU)  Parliament  Resolution on the  use of palm oil and on overcoming the issue of  deforestation.  The Union  issued a RED policy aiming at directing the European community  to use energy-efficient  and  emission-free   fuels.  The regulation comprises a  rejection of  palm oil and  its derivative products. The ban on importing such products imposed by  the European Union has caused a decrease in Indonesia's GDP by 1155.28 million Euros. In addition, this impacted the employment sector, particularly the oil palm farmers who experience a decrease in income.  Despite the issuance of the European Union policy that prohibit or restrict palm oil import, the EU has dependence on  Indonesia’s palm oil since they can not produce the oils on a large scale in order to meet their needs. This is a qualitative study and the data collection technique is the heritage study methods obtained from journal, scientific journals on similar topics. As for the theoretical analyses, the  mercantilism approach with the  aim to  use economic policies to maximize the state’s wealth as a means of political power is implemented.