Indonesia to Suspend Exports of Palm Oil to Tackle Domestic Shortage

Indonesian President Joko Widodo and Australian Prime Minister Scott Morrison (not shown) give a joint statement at Parliament House in Canberra, Australia, on Feb. 10, 2020. (Rick Rycroft - Pool/Getty Images)

Indonesia will ban the export of cooking oil and its raw materials from April 28 to tackle domestic shortages and control surging cooking oil costs, President Joko Widodo said Friday.

“I will monitor and evaluate the implementation of this policy so [that] availability of cooking oil in the domestic market becomes abundant and affordable,” the president said in a video broadcast, local media Tempo.co reported.

Authorities have been struggling to control the domestic market for palm oil-based cooking oil after prices surged 40 percent at the start of the year due to high global prices, with the average price of cooking oil 26,436 rupiah ($1.84) per liter.

Indonesia’s government has set a cap of 14,000 rupiah ($0.98) per liter for bulk cooking oil, but Trade Ministry data showed that it was sold at more than 18,000 rupiah ($1.24) this month.

“We have reviewed that subsidies for producers that have been running for several weeks are not yet effective. At the markets, I see that a lot of bulk cooking oil is not priced in accordance with the predetermined [highest retail price]. This means there is indeed foul play,” Widodo said.

The decision comes after hundreds of university students gathered outside parliament in the capital city of Jakarta in protest of high cooking oil prices and a mooted extension of Widodo’s term in office. Police reportedly fired tear gas and water cannon to disperse protesters.

The Jakarta police chief said that a university lecturer who was participating in the demonstration sustained severe injuries after a “non-student” group battered and stomped on him. Six police officers who tried to help the lecturer were also injured.

Indonesia, the world’s top palm oil producer, had previously required palm oil companies to sell a portion of their planned exports to local buyers under a so-called Domestic Market Obligation scheme to control the country’s cooking oil prices.

Providing proof that palm oil had been distributed domestically was the main requirement during that period for securing export permits.

On Wednesday, the president urged authorities to conduct a full probe into a corruption case linked to the issuance of palm oil export permits, which he said has resulted in a shortage of cooking oil and soaring prices in the country, according to local reports.

“The attorney general’s office has determined four suspects in the cooking oil cases, and I demand [authorities] to investigate until it is finished. So we can find out who is playing around [with the crude palm oil export],” he said in a video broadcast.

Indonesian authorities have launched an investigation into alleged corruption linked to the issuance of palm oil export permits, charging four individuals, including a trade ministry official and palm oil company executives.

Reuters contributed to this report.