JAKARTA – The exports of palm oil products and derivatives can save Indonesian economy from the threat of global economic recession, but the government should design creative policies and relax the export regulations.
The Institute for Development of Economics and Finance (Indef) Executive Director Tauhid Ahmad said that in facing the global recession risk, the Indonesian government needs to devise its policies in such a way that will provide strong support for commodities of exports, which include the palm oil. Ironically, there are still a number of policies that hinder the exports.
“The government can accelerate the palm oil exports and save the national economy from the global recession risk if it removes all policies that hinder the exports. For example, the government’s policy of domestic market obligation (DMO), domestic price obligation (DPO), export approval (PE) and flush out (FO), export levy, etc. They obstruct the palm oil exports,” Tauhid said on Tuesday, 11 October 2022.
“By removing such regulations, Indonesia will benefit from the price increase of commodities at the global market. The more so as the palm oil commodity is the largest contributor of foreign exchange for Indonesia,” he said.
Based on data from Statistics Indonesia (BPS), the exports of palm oil had contributed Rp112.82 trillion to the national economy during the first quarter 2022, which is equivalent to 2.5 percent of Indonesia’s gross domestic products (GDP).
According to Tauhid, the policies of DMO and DPO had caused price disparity between the domestic market and global market (CIF Rotterdam), which has now reached US$1,050 per metric ton.
“We also have to consider that the price increase at the global market will last for longer time and it will be difficult to decline in the near future. Here we’ll see who will suffer the loss from the decrease of price of the palm fresh fruit bunches (FFB). We shouldn’t allow the smallholders suffer too much as they only have plantations below two hectares,” said Tauhid.
Meanwhile, the trade ministry’s Domestic Trade Director General Syailendra said that the DMO policy had been effective in securing the supply of cooking oil at domestic market and stabilizing the prices of cooking oil.
“So, what’s wrong with this policy? The price of FFB has been rising, and the cooking oil is now abundant,” Syailendra said at his office building in Jakarta on Tuesday, 11 October 2022.
Syailendra pointed out that the CPO DMO policy is not intended to hinder the exports of palm oil or to reduce the price of FFB from the oil palm smallholders.
According to him, the government has already given many relaxations to business players in exporting their products. “One of them is the increase of export quota ratio to 1:9. It is for bulk cooking oil, not to mention the implementation of DMO by packaging the cooking oil or sending to eastern Indonesia. In that case their export quota is increased,” he said. (*)
Source: Bisnis.com
