JAKARTA – Indonesia, the world’s biggest palm oil exporter, plans to require crude palm oil exports to go through a futures exchange in order to create the country’s own benchmark price, the head of its commodity futures regulator said.
The trade ministry’s Commodity Futures Exchange Supervisory Board (BAPPEBTI) Chairman Didid Noordiatmoko said that currently the trade ministry, and other related ministries and institutions are developing a trading scheme for crude palm oil which aims to launch in June 2023.
“The big strategy is how to require CPO exports to be done through a futures exchange. But the trade ministry will still issue the permits for CPO export,” Didid said on Thursday during a public discussion on Indonesian strategy to become global barometer of palm oil prices.
Most Indonesian palm oil exporters currently conduct sales directly with buyers without going through an exchange, while auctions held by state trading company KPB Nusantara only offer physical palm oil and not futures contracts.
Refined palm products would be allowed to be exported directly, Didid said, but CPO must be procured via an exchange.
Authorities hoped that price discoveries could be reached within a few months after exporters started trading through an exchange.
Industry groups said they backed policies to help Indonesia become a price setter for palm oil, but warned that thorough preparation was needed.
“The rules must be clear and also there should not be additional costs which could reduce competitiveness of our palm oil,” said Eddy Martono, Secretary General of the Indonesia Palm Oil Association (GAPKI).
Sahat Sinaga, chairman of the Indonesia Palm Oil Board (DMSI), said it was important for Indonesia to build trust for an exchange to be successful, while authorities must also prepare the infrastructure for the physical trade of the vegetable oil.
Didid said that the authorities are still in a process of discussing the details of the policy, which will also include the possibility of providing fiscal incentives.
According to him, the new policy is also aimed to improve the CPO trading, which is not yet well managed as reflected by differences of data on palm oil exports. “The differences are potential to result in lower than expected state income from palm oil. It will also help the government in setting the balance of CPO commodity and preventing potential shortage like the case seen last year that had resulted in the shortage of cooking oil,” he said. (*)
Source: KONTAN.CO.ID
