Chinese investors fueling Indonesia's coconut boom

As China's demand for coconut products keeps rising, the entry of Chinese investors into Indonesia's coconut processing industry and plantations has injected new hope for the Southeast Asian nation to optimize the use of its abundant coconut crops for higher revenue growth.

So far, Indonesia, the world's largest coconut producer, has shipped mostly whole coconuts to more than 100 countries, with China being a major destination, according to the Indonesian Quarantine Agency, a cabinet-level government agency. In fact, China has been Indonesia's largest trading partner for over a decade and is currently one of its top investment sources, too.

Processing coconuts into derivatives for export is part of Indonesia's flagship downstream industry program under President Prabowo Subianto. Originally initiated by his predecessor Joko Widodo, the program deals with the mineral, agricultural and marine sectors. The specific plan for coconut is called "Roadmap for the Development of Coconut Downstream 2025-45".

This year, Chinese investors have started investing in coconut plantations and setting up coconut processing facilities in the eastern Sulawesi and Maluku islands, which are among the country's top coconut producers.

In Sulawesi Island's Central Sulawesi Province, the Chinese company Zhejiang FreeNow Food is building a facility to process coconuts into derivatives such as virgin coconut oil, a pure, cold-pressed coconut oil that has not been refined, bleached, or deodorized; coconut milk; and coconut sugar for export to China.

FreeNow, one of China's largest coconut-based companies, has teamed up with a consortium of Chinese and Indonesian companies to build a facility in Morowali.

Malaysia's Minister of Investment Rosan Perkasa Roeslani said in October that FreeNow's Morowali project, with a total processing capacity of up to 500 million coconuts per year and employing up to 10,000 workers, will start operations in 2026. This will make it one of the largest coconut processing facilities in Asia, the minister said.

Morowali, which is located around 2,400 kilometers east of Jakarta, is also home to the Indonesia Morowali Industrial Park, Indonesia's largest nickel-based industrial area that is majority-owned by China-based Shanghai Decent Investment (Group) Co Ltd. The park is one of the world's largest vertically integrated centers of nickel-based processing for electric vehicles' lithium-ion batteries.

FreeNow has reached an agreement with the regency government of the Banggai Islands, in Central Sulawesi, to develop coconut plantations for exporting coconut derivatives to China.