January 5, 2026
JAKARTA – 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.
Great leap
Banggai Islands’ acting Regent Ihsan Basir told local media that local officials had visited FreeNow’s facilities in China and that the agreement they reached with the company was a great leap toward improving the welfare of the Banggai people.
FreeNow provides quality coconut seeds for farmers in the Banggai Islands through village cooperatives.
In the Central Sulawesi Regency of Donggala, PT Agro Persada Borneo, a registered Indonesian company, began construction of its coconut processing plant on Oct 3. Local officials expect the project to boost economic development and improve employment opportunities in the regency and other coastal areas in the western part of Central Sulawesi.
In March, another Chinese investor, Luckin Coffee, which is China’s leading coffee chain, reached an agreement with the government of the Banggai Islands to secure coconut supplies for the Chinese company.
During the agreement-signing ceremony in Banggai, Li Shan, Luckin Coffee’s supply chain director, stressed the importance of maintaining the quality of coconuts to be supplied to his company. In China, consumption of coconut-based latte coffee produced by Luckin is growing fast.
This October, in North Halmahera Regency in the province of North Maluku, east of Sulawesi, local officials and coconut farmers witnessed the inaugural shipment to China of two containers of locally produced coconut milk and virgin coconut oil that had been processed at a facility owned by PT Natural Indococonut Organik. It is not yet clear whether any Chinese investors will join the company in processing coconuts in Halmahera.
Minister of Agriculture Andi Amran Sulaiman officiated at the inaugural shipment ceremony along with North Maluku Governor Sherly Tjoanda Laos and top executives of the Indonesia-owned PT NICO.
On the occasion he said that, increasingly, people in China and European countries are developing a liking for coconut-based beverages, in addition to traditional animal-based products.
In August, PT NICO exported coconut derivatives to the Republic of Korea, Canada, Australia, Hungary, Germany and the Netherlands.
The company’s processing plant in North Halmahera’s Tobelo village has the capacity to process 600,000 coconuts per day.
While in Halmahera, the agriculture minister announced the government’s program to develop 10,000 hectares of new coconut plantations on the island and in other areas of North Maluku next year. The aim is to ensure future coconut supply for the Tobelo processing plant, he said.
Bambang, deputy head of the Indonesian Quarantine Agency, said Indonesia has to improve the quality of its coconuts and their derivatives to meet foreign buyers’ standards, including those set by Chinese importers.
Other problems in developing the country’s downstream industry include low coconut productivity and low-quality coconut seeds. Low productivity is partly due to the fact that almost 50 percent of coconut palm trees in Indonesia are more than 25 years old, media reports said.
Domestic processing
Billy Widjaja, co-owner and chief commissioner of PT Indo Thai Coco Investama, said it is high time Indonesia took steps to boost domestic processing of coconuts for export. “We need to stop just exporting coconuts for processing industries overseas,” he said.
PT Indo Thai Coco Investama is partnering with a coconut firm from Thailand to build a coconut processing plant in Lampung on the western Indonesian island of Sumatra.
The plant will produce coconut derivatives such as coconut peat, coconut fiber, charcoal, coconut milk and coconut water for export to Thailand, China, Japan and the United States.
“We are open to cooperation with any other party. We are ready to discuss with them about their specific needs,” Widjaja said. He is also hopeful that the government will succeed in carrying out its sea toll road program for interisland connectivity so that his company can source coconuts from East Nusa Tenggara and other eastern Indonesian regions.
Irfan Abd Rahim, a native of Halmahera, said villagers in the eastern province were glad to watch, on national television and through YouTube channels, the maiden shipment to China in October of coconut products from their area. The coconut farmers are in a jubilant mood, he said from Halmahera in a telephone interview. He hopes there will be bigger ships for transporting coconuts from smaller islands to PT NICO’s factory in North Halmahera.
Suaib Yunus, head of Belang-Belang village in South Halmahera Regency, said he agrees with Abd Rahim, and that there is a need for more sea armadas to transport coconuts to the processing facility in Tobelo. He mentioned insufficient land road systems in the area.
In Nusa Tenggara Province, the inaugural export-led shipment of whole coconuts from its Sikka Regency took place early this year. The commodity was shipped to Malaysia, India, Dubai and Türkiye.
Sonny Koda, deputy headmaster of a senior secondary school and a social activist in Sikka Regency in East Nusa Tenggara Province, which is located about 2,400 kilometers east of Jakarta, said he expects investors to come in and help process their coconuts into export-oriented derivatives.
He said that in the 350,000-population regency, small-scale farmers own and manage more than 90 percent of the area’s coconut palm trees, as in other parts of the country.
Indeed, coconut palm tree owners in Sikka feel financially secure, although their earnings are small due to the stubbornly low prices of the commodity. However, it is still much better for them to have than not have coconut palm trees, Koda said.
So many in the South Asian nation owe their education to this round fruit
Irfan Abd Rahim feels forever indebted to his father for tirelessly climbing up coconut palm trees, picking the fruit, and then selling the coconuts and dried coconut meat, copra, to traders in South Halmahera in North Maluku Province many years ago.
The traders then sold those to other traders who processed them into cooking oil and powder before selling them at local markets or shipping them to other places including the then-faraway Java Island.
“For me, talking about coconuts means talking about my academic degree,” said the 42-year-old native of North Halmahera, who holds a bachelor’s degree in law and is now the editor-in-chief of a media outlet based in the City of Ternate in North Maluku Province. Abd Rahim’s two siblings also graduated from college, thanks to their father’s hard work.
Abd Rahim hopes there will be enough vessels in the future to transport coconuts from smaller islands of Indonesia to coconut processing centers in North Halmahera. Coconuts are the most dependable economic commodity in the region.
President Prabowo Subianto, who became president last October, and Vice-President Gibran Rakabuming Raka have launched a flagship downstream program for minerals, agriculture and marine products.
The government has also introduced a program to open free elementary and secondary schools for children from the poorest families. Students at the so-called “Sekolah Rakyat”, or People’s Schools, will learn practical skills so they can find jobs for themselves after graduation.
Designating Sekolah Rakyat as “education downstreaming”, the president stresses that education is the key determining factor for the nation’s future.
Leo Longa, a coconut farmer in Sikka, appreciates the local government’s initiative to export coconuts. As he owns 70 coconut trees on his plot of land, Longa said he was able to pay for the education of his three children. In fact, two of them have already graduated from college. His eldest son now helps him manage his coconut business. East Nusa Tenggara Province, where he comes from, is one of Indonesia’s 10 poorest regions.