Palm Oil Downstreaming Not Only Domestically, Indonesia Explores Processing in Egypt

Downstreaming of oil palm has so far been synonymous with the development of processing industries domestically to increase export value. However, Indonesia is now exploring another approach through investment in processing facilities in export destination countries. The planned collaboration between Danantara and the Egyptian Sovereign Wealth Fund (SWF) is one such example. Interestingly, Egypt already imports a large amount of processed palm products from Indonesia. So, what added value is intended to be developed through the construction of processing facilities in that country?

In October 2026, Danantara revealed plans to collaborate with the Egyptian SWF to explore the construction of palm oil processing and refining facilities. These facilities are intended to meet Egypt's domestic needs while expanding market reach to the Middle East and Africa. The Egyptian government has reportedly provided an area for the development of these facilities, although details of the investment and production capacity have not yet been announced.

In terms of trade, Egypt is not a new market for Indonesian palm oil. Data from the International Trade Centre (ITC) shows that exports of palm oil and its fractions (HS 1511) from Indonesia to Egypt reached approximately 1.12 million tons in 2025, up from 792,000 tons in 2024. Meanwhile, World Bank WITS data recorded that in 2024, exports of palm oil products other than crude (HS 151190) reached 792,000 tons with a value of approximately USD 732 million. This means that Indonesia's palm oil trade with Egypt has included processed products, not just crude CPO.

This condition is an important consideration in the plan to build a refinery in Egypt. If the new facility is used to refine CPO from Indonesia, part of the processing and its added value will occur abroad. Conversely, if the facility is directed towards further processing of Indonesian palm products, the investment has the potential to expand industrial activities without having to replace the refining processes already underway domestically. However, the types of raw materials and final products planned still need to be clarified.

From a market perspective, Egypt's geographical position connecting the Mediterranean, Middle East, and Africa offers regional distribution opportunities. WITS data shows that in 2024, Egypt exported about 8,400 tons of palm oil products other than crude (HS 151190) to several countries, including Syria, Jordan, and Libya. Although this indicates regional trade, the volume is still relatively small compared to imports from Indonesia. Therefore, Egypt's potential as a palm oil distribution center still needs to consider market demand, logistics costs, trade tariffs, and competition with other suppliers.

Thus, investment in overseas palm oil processing does not necessarily conflict with domestic downstreaming. However, its benefits depend on the industrial activities developed and the additional markets that can be reached. Given that this project is still in the exploratory stage, clarity regarding the type of processing, source of raw materials, and target market is important to assess whether the collaboration can expand trade opportunities while complementing Indonesia's palm oil processing industry.