Chinese coconut giant begins US$100M factory build in Indonesia to curb raw exports

INDONESIA – A Chinese firm has begun construction on a US$100 million coconut processing plant in Indonesia, a move the government says will help reduce raw coconut exports and support local industry.

“We used to export raw coconuts to China, but that’s no longer the case. Now, coconuts will be processed locally before being sold overseas,” said Investment Minister Rosan Perkasa Roeslani on Tuesday in Jakarta.

The facility, currently under construction, marks a shift in how Indonesia handles its coconut resources. Local processors have long raised concerns over rising raw exports that create shortages at home.

Earlier this year, coconut milk prices soared, sparking frustration from small-scale processors and households. Although raw coconut exports to China generated less than $1 million annually, the effect on domestic supply has been significant.

Rosan did not name the company but said it is the world’s largest coconut processor. The firm plans to open more facilities in other regions.

“They’ve already invested US$100 million in one town, with plans to expand into others,” he noted.

The investment comes as part of a wider push by the Indonesian government to strengthen local production chains and reduce dependency on exporting raw agricultural goods. According to Rosan, processed goods offer more value and create employment opportunities, especially in rural areas.

“The focus now is on making sure local farmers and communities benefit,” he said. “China remains very active in investing in Indonesia, not only in minerals but also in other key sectors like coconuts.”

Production pressure

Indonesia is the world’s largest coconut producer, harvesting over 17 million metric tonnes in 2020. Despite this, the country’s coconut industry has been under pressure due to climate change, unregulated exports, and factory closures.

Major companies, including PT Pulau Sambu Guntung, have laid off thousands of workers.

In response, the government has also begun building a new coconut processing facility in Morowali, Central Sulawesi. This move is expected to increase capacity and ease pressure on local supply.

Figures from the Investment Ministry show Chinese investment in Indonesia stood at US$3.6 billion in the first half of 2025, slightly down from US$3.9 billion during the same period last year.

However, officials believe targeted investments like this one could help ease existing strain on the coconut sector.

To protect the domestic coconut market, experts are urging the government to find the right balance between exports and local needs. Suggestions include better oversight of the supply chain and limits on raw coconut exports.

Indonesia’s leading coconut products include coconut oil, desiccated coconut, coconut meat, and shisha charcoal. These goods account for nearly a third of global coconut trade value, putting the country in a strong position internationally, if supply challenges can be brought under control.

Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE.