The Palm Scribe

Indonesian Palm Oil Gains Strong Champion in Mahendra Siregar

Mahendra Siregar, Center, in IPOC 2019.

Among the many names that made it into the list of top public officials for the second term of Indonesian President Joko Widodo, was a name familiar to the palm oil industry – veteran technocrat and former diplomat Mahendra Siregar.

His appointment as Deputy Foreign Minister on October 25, with a special brief to, among other things, maintain and safeguard the sustainability of the Indonesian palm oil industry, is good news for everyone involved with Indonesia’s largest cash crop.

Mahendra has long been recognized as one of the most outspoken and erudite spokespersons for the palm oil industry when other Indonesians were too busy politicking or looking after their own interests.

He was Indonesia’s Ambassador to the United States when he was tapped for the Deputy Foreign Minister’s post. Prior to that, he was the deputy for economic cooperation and international Financing for the Coordinating Minister for the Economy until 2009, as well as deputy minister for several finance and trade ministers between 2011 and 2013.

His track record also straddles two sectors — foreign affairs, having been a diplomat between 1986 and 2001; and the economy — starting in the coordinating ministry for the economy in 2001 and then chairing the Investment Coordinating Board (BKPM) in 2013-2015.

In addition, as executive director of the Council for Palm Oil Producing Countries (CPOPC) from 2016 to December 2018, he is also well acquainted with the palm oil sector.

Speaking to journalists after meeting President Joko Widodo, Mahendra Siregar said the head of state had asked him to take up the post of deputy foreign affairs minister and assigned him three specific tasks to be completed within one year, and they also came with detailed key performance indexes.

Most pertinent among those tasks was the assignment to maintain and safeguard the sustainability of the Indonesian palm oil industry, which has become an important contributor to the country’s economy and the state coffers. Palm oil exports bring in around $20 billion and the figures also needed to be raised further, he said.

The industry, however, has been plagued by low global prices for the commodity, and the relentless attacks and accusations directed against palm oil and its industry. Being the world’s top palm oil producer, exporter, and consumer, Indonesia is deeply affected by these campaigns.  The massive forest and ground fires this year did nothing to improve the situation.

At first glance, Mahendra certainly appears to be the right man in the right place. He ticks all the right boxes. First of all, economic diplomacy has been the staple food for this holder of a Masters in Economics from Monash University, and Jokowi’s cabinet lineup that is heavy on the economy side clearly shows his intention to boost the foreign ministry’s economic diplomacy, including to support its palm oil industry.

Palm oil holds no mystery for Mahendra. As chair of the CPOPC that groups Indonesia with Malaysia and Colombia, he has had to deal with the commodity and its industry and fight the negative campaign against palm oil producers and the commodity itself, coming from non-palm oil producing countries.

As chairman of that organization, his stance had been loud and clear to all. He has become a champion of the palm oil industry, often to the point of eschewing his diplomatic background.  He has been vocal in both domestic and international fora, in criticizing the European Union’s plan to gradually phase out palm oil from its transportation energy sector, accusing the regional organization of discrimination and of having based the policy on self-interest, that of protecting their own vegetable oil industry. He has also repeatedly stressed that the EU’s intake of Indonesian biofuel was negligible and the loss could be easily offset by new market destinations.

Improving palm oil’s image internationally, and perhaps also domestically, is not a one-man show. It needs the support of many and coordination is key. Having held positions in the concerned ministries and institutions, Mahendra should have ample knowledge of how things work in those institutions and also have a clue on how best to get them to cooperate and coordinate.

His experience in international trade affairs and in trying to draw foreign investment would also provide him with insight on how to go about promoting palm oil overseas.

But experience aside, has he got the capability to meet the targets?

What is clear is that Mahendra is a fighter. At the helm of the BPKM, he has managed to overcome the difficulties of instilling confidence in investors who were increasingly wary of rising nationalism and political uncertainty ahead of the 2014 general elections at the time. He was also credited with executing Jokowi’s wishes for simplifying investment permit issuance and in the resulting improvement in the World Bank’s Doing Business Index in 2017, which saw Indonesia jump 15 ranks up.

He may be a former diplomat, but he has shown himself never hesitant in stating his opinion, regardless of whether it may offend others. His stance has always been clear and the country does need leaders with clarity of not only the mind but also with a consistent and unwavering position.

But no matter how brilliant a leader can be, he would always need to rely on his subordinates to carry on his plans. One of Mahendra’s probable shortcomings is that he has gone through so many institutions in such a relatively brief time, that he may not have had time to forge the strong loyalties he needs to support his policies and decisions.

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