87 Percent of Production Insufficient: Time for IMT-GT to Lead the Palm Oil Value Chain

The agreement on the substance of the memorandum of understanding for palm oil cooperation between Indonesia, Malaysia, and Thailand in Medan on July 21, 2026, is a strategic step that deserves appreciation. Its signing is proposed to take place at the 32nd IMT-GT Ministerial Meeting in September 2026. These three countries control about 87 percent of the world's palm oil production. Few global commodities have their production so heavily concentrated in three countries. However, a large share of production does not automatically make a country or region the controller of the industry.

During the heyday of petroleum, Indonesia was known as one of the world's major producers. However, this advantage has not been fully translated into mastery of technology, processing capacity, and value-added industries. When production from old fields declined while domestic consumption continued to increase, Indonesia became a net oil importer in the early 2000s. This experience shows that a position as a producer will not sustain itself without investment, resource regeneration, technology mastery, and downstream industry development with regulatory support to ensure sustainability.

This experience should serve as a mirror for strengthening palm oil cooperation under the Indonesia–Malaysia–Thailand Growth Triangle (IMT-GT) framework, which has been established since 1993. Although palm oil downstreaming has developed in Indonesia, Malaysia, and Thailand, the position of these three countries in the overall global value chain is not yet dominant. Indonesia, Malaysia, and Thailand should not be known only as producers of crude palm oil (CPO), while much of the higher value-added is still created at the stages of advanced processing, technology development, product formulation, and market control, which can be enjoyed by countries that are not the main producers of raw materials. In the modern economy, competitiveness is no longer solely determined by the ownership of raw materials but also by technology mastery, innovation, and value chains.

Therefore, regional cooperation needs to be directed beyond merely increasing production or expanding market access. IMT-GT has the opportunity to build an integrated palm oil bioeconomy ecosystem. Collaboration can be built based on the advantages that have developed in each country, for example through joint projects in bioenergy and SAF, specialist oleochemicals, functional foods, and biomaterials. The goal is not to limit the development fields of each country but to reduce duplication, strengthen specialization, and create complementary regional supply chains. Such collaboration will form a more competitive regional value chain compared to if each country develops the same industry independently.

One of the main foundations for realizing such cooperation is the availability of consistent and reliable data. To this day, Indonesia's palm oil industry data is still scattered across various ministries, agencies, associations, and business actors, often using different definitions and methodologies. This condition complicates policy-making, reduces credibility in the eyes of the international market, and hinders the development of trading instruments such as a liquid and reliable CPO exchange.

Indonesia needs to build a National Palm Oil Data Platform as a national data reference that integrates or connects data on production, productivity, stocks, trade, emissions, downstreaming, as well as research and innovation. This platform does not have to replace all existing systems but needs to ensure that data from various institutions can be interconnected, read, and used together. Through the cooperation of the three countries, this initiative can start as a palm oil analytics and knowledge center in the IMT-GT region, then gradually develop into a Regional Palm Oil Intelligence Center. Thus, Indonesia can not only maintain its role as the largest producer but also have the opportunity to become a reference in data, analytics, and palm oil industry knowledge.

Furthermore, the cooperation should not stop at coordination among producer countries but should evolve towards regional palm oil governance that includes harmonization of sustainability standards, joint traceability systems, alignment of carbon footprint methodologies, research collaboration, development of credible price references, and joint advocacy. This foundation will strengthen the bargaining position of the three countries in facing global regulatory changes and international market dynamics.

Indonesia's experience as an oil-producing country shows that natural resource advantages are temporary if not accompanied by mastery of industry, technology, and information as well as regulatory support that supports sustainability. Therefore, the question is no longer whether Indonesia, Malaysia, and Thailand can maintain their position as major producers, but whether the three can lead the transformation of the global palm oil industry. If the IMT-GT momentum is used to build the foundations of data, innovation, industrialization, and regional governance, the control of 87 percent of production can develop into real leadership in the global value chain and bioeconomy.