Chinese investment boosts Indonesia's coconut downstream industry

JAKARTA, Aug. 7 (Xinhua) -- Several Chinese companies have begun investing in coconut derivative processing plants in Indonesia, opening a new chapter of economic cooperation between the two countries in the coconut downstream sector.

Earlier, Indonesian Minister of Investment and Downstream Industry Rosan Roeslani announced that a Chinese company plans to build a number of coconut processing facilities in several Indonesian cities, with a total investment of 100 million U.S. dollars.

"We previously exported unprocessed coconuts to China, but now they will be processed here," Roeslani said in Jakarta recently.

Eliza Mardian, an agricultural researcher at the Center of Reform on Economics Indonesia, told Xinhua that investment in Indonesia's coconut downstream industry remains relatively low. At present, the country still relies heavily on exporting whole coconuts or shredded and dried coconuts.

Data from Statistics Indonesia showed that Indonesia exported 204,400 tons of coconuts to China between January and May 2025, up 47 percent from the same period last year. Shipments include whole round coconuts as well as dried and shredded coconuts.

Coconut-based processed products have been gaining popularity in China, particularly as ingredients for beverages. This trend may be one reason Chinese companies are increasingly interested in investing in Indonesia's coconut industry.

One example is Luckin Coffee, a leading Chinese coffee chain known for its popular coconut-infused latte. As demand surged, Luckin Coffee in March formed an exclusive partnership with Banggai Kepulauan regency government in Central Sulawesi to secure coconut supplies.

Earlier, another Chinese company from Zhejiang province had invested in coconut plantations in Banggai Kepulauan regency through a strategic partnership with the local government established in late December 2024.

Mardian said that Chinese investment could significantly boost the growth of Indonesia's domestic coconut industry, especially if processing plants focus on producing a wide range of derivative products such as coconut milk, coconut oil, and coconut flour.

"If this investment creates strong downstream linkages, it will generate a substantial multiplier effect for the Indonesian economy, including job creation," Mardian said.■