STRATEGIC ASSESSMENT. Indonesia has received its first requests for palm oil export permits following the lifting of a ban a week ago, some of which could be granted on Monday, Senior Trade Ministry Official Veri Anggriono said, signaling a calibrated resumption of shipments amid protracted delays.
Indonesia is requiring firms to reserve a share of their palm oil exports for the local market under a Domestic Market Obligation (DMO) and to join a bulk cooking oil program designed to maintain domestic supplies and keep runaway prices in check.
Veri in a discussion with industry participants on Friday said Indonesia will allocate about 1 million tons of palm oil for export, prioritizing companies that have been registered for the government’s bulk cooking oil program. Shipments could hopefully start before the end of month if companies immediately request permits, he said.
After being assigned a new task by President Jokowi last week, Maritime Affairs and Investment Coordinating Minister Luhut Binsar Pandjaitan on Wednesday said he would require all palm oil companies to have headquarters in Indonesia, so that the supervision process and tax payments could be carried out properly.
Luhut said there are still many palm oil companies whose head offices are abroad, causing Indonesia to lose potential income from taxes. In addition, he will also conduct a large-scale audit of all palm oil companies in Indonesia.
Indonesia, has issued export permits for 179,464 tons of palm oil as of June 2, Trade Ministry senior official Oke Nurwan said on Thursday, after a ban on shipments was lifted last week. He said the government has issued 160 export permits to 18 companies for the shipments.
So far, permits have been issued for 87,109 tons of refined, bleached and deodorised (RBD) palm oil and 90,255 tons of RBD olein, while the rest were issued for cooking oil, according to trade ministry data provided by Oke.
Industry Ministry’s Agroindustry Director Putu Juli Ardika on Monday announced they would scrap the subsidy for bulk cooking oil, effective from Tuesday, leaving many producers unable to file a subsidy claim for selling the staple food below market prices.
Replacing the subsidy scheme, the so-called bulk cooking oil public program (MGCR) is to take effect on Jun. 1. The MGCR sets price caps and domestic market quotas for cooking oil ingredients such that prices fall to the government target price.
Indonesia’s anti-monopoly agency known as KPPU on Tuesday called for tighter controls on how much palm oil plantation area a business group can operate, to reduce the risk of unfair competition in the downstream cooking oil industry. The agency has been investigating cartel practices in the cooking oil sector, which uses palm oil as a raw material and has seen retail prices soar in recent months.
KPPU found in an initial analysis that just five business groups in Indonesia control a large chunk of the country’s palm plantation area and that the area they control is larger than allowed, director Marcellina Nuring said in an online briefing on Tuesday.
She declined to name the groups and did not share details of size of their operations. KPPU is currently conducting a review of the issue and will submit the results of their analysis to the government, though it did not specify a timeline.
A court in Indonesia has dismissed lawsuits filed by two palm oil companies against a district head who revoked their permits over various violations. The May 23 rulings mark the latest in a string of legal defeats for palm oil companies who lost their licenses to operate in Indonesia’s West Papua province.
PT Anugerah Sakti Internusa (ASI) and PT Persada Utama Agromulia (PUA) had filed separate lawsuits on Dec. 29, 2021, against Samsuddin Anggiluli, the head of South Sorong district in West Papua province.
But the judges hearing the cases in the Jayapura State Administrative Court ruled that the revocations ordered by Samsuddin, on the basis of various legal and administrative violations by the companies, was justified.