Coordinating Minister for Economic Affairs Airlangga Hartarto, stated that the recently enacted European Union Deforestation-Free Regulation (EUDR) will affect the performance of Indonesian logistic sector.
In addition to the EUDR, the Carbon Border Adjustment Mechanism (CBAM) also pose quite a risk because it targets the iron and steel industry, both of which are Indonesian leading export commodities.
“The logistic will be the mainly affected sector because before the goods are declared, it cannot be sent [to Europe]. Further in the future, there will be more trade barriers just for the sake of the environment,” Airlangga said in a discussion on the Indonesian National Single Window broadcasted through the Ministry of Finance Youtube channel on Friday (9/6).
The EUDR limits six Indonesian commodities, namely coffee, cacao, rubber, furniture, crude palm oil, and cows.
Mandatory geotagging
The EUDR obliges companies or importers dealing with the abovementioned commodities to make sure that their products did not came from deforested lands or caused damage to the environment.
“The effect is, they are forcing for geotagging traceability. This will pose difficulty because, for example, coffee beans in a coffee package may not come from one place,” Airlangga said.
Lack of respect for partner countries
He also deplored the fact that the European Union made the decision to issue the regulation unilaterally without consulting with partner countries. Moreover, the European Union refused to acknowledge the currently implemented license of Indonesian products, such as the Wood Legality Verification System (Sistem Verifikasi Legalitas Kayu – SVLK).
“This is a problem, and [was made] without consulting with us. So this is a regulation made to regulate other countries, when usually we make regulations to regulate ourselves, but this is to regulate operators in other countries,” Airlangga said.
