The anti-dumping duties imposed by the European Union on Indonesia's biodiesel will severely hurt exports of the commodity to the region.
Biofuel Producers Association (Aprobi) secretary-general Paulus Cakrawan said in Jakarta on Friday that exports of biodiesel, which had begun to decline since the EU launched its investigation on the dumping charge last year, would further decline due to the punitive duties.
Indonesian biodiesel producers especially those directly affected by the additional duties would face difficulties competing with producers in the EU market due to the anti-dumping measures, Paulus said.
For that reason, he said, the association would support all efforts to oppose the tariffs. "We will follow the existing procedures and use all possibilities to oppose these measures," he said.
Since the investigation by the EU began last year, the industry has felt the pinch with exports dropping by almost half in the January-April period this year, according to Aprobi.
Paulus said exports would plunge even further because the additional tariffs meant Indonesian biodiesel products were no longer competitive in the EU market.
Meanwhile, Deputy Trade Minister Bayu Krisnamurthi said in Jakarta on Friday that the government had lodged a strong formal protest against the EU's anti-dumping duties denying allegations that Indonesian companies were able to sell their biodiesel products in the region at low prices because of government subsidies.
He said the companies were able to sell their products at more competitive prices because they used cheaper raw materials.
The EU's trade authority, the European Commission, imposed six-month punitive measures by raising import duties from 2.8 per cent to 9.6 per cent on a number of Indonesian exporters, including Musim Mas, Wilmar Bioenergi, Wilmar Nabati Indonesia and Pelita Agung Agrindustri.
The four companies hit with the anti-dumping duties accounted for around 95 per cent of overall Indonesian exports and therefore the levies had been a major blow to the local industry, Paulus said.
Last year, Indonesian biodiesel makers exported around 1.5 million tons of biodiesel. Imports from Indonesia to the EU rose dramatically from 157,915 tons in 2008 to 1.09 million tons in 2011, and Indonesian producers' market share surged from 1.4 per cent to 9.7 per cent, according to EU statistics agency Eurostat and the biodiesel board.
"This policy by the European Commission will hurt European consumers as they will lose a competitive source of biofuel," Bayu told reporters in a briefing at his office.
Bayu added that the inexpensive raw material, palm oil, meant locally-made biodiesel was cheaper than similar fuel made from ingredients such as soybean or rapeseed.
Indonesia, the world's biggest producer of palm oil, will see its biodiesel production reach 3.6 million tons this year, representing 9 per cent of worldwide supply, according to the Indonesian Vegetable Oil Refiners Association (GIMNI).
The EU will announce its final ruling on the case, which could lead to the imposition of levies for five years, in the next few months.