JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono said the combination of regulation on foreign exchange from exports (DHE) of natural resources scheduled to take effect since January 2026 and the implementation of biodiesel 40 percent (B40) program are potential to pressure the sustainability of Indonesian palm oil industries if they are not supported with policy flexibility.
Eddy stated that the DHE policy could have a direct impact on companies’ cash flow, which will then affect production, exports, and the competitiveness of the Indonesian palm oil industries. The requirement to withhold up to 50 percent of the export proceeds (DHE) could negatively affect the ability of companies to meet their daily costs of operations.
“In the case of palm industries, if their operational costs are insufficient, usually growers are forced to reduce their use of fertilizer. As a result, their production will decrease and their targets of production are not achieved,” said Eddy.
He emphasized that reducing fertilizer is not merely a technical issue, as it has direct implications on reducing the productivity of oil palm plantations in the medium to long term.
On the other hand, Eddy highlighted that upgrading the biodiesel blend from B40 to B50 requires a significant increase in palm oil feedstock.
“If the government decides to upgrade the B40 program to B50, the need for palm oil as raw material will increase by around 3 million tons. This will definitely require additional supply of palm oil,” he said.
However, he cautioned that overly strict DHE policy will risk suppressing production at a time when domestic demand is increasing, creating an imbalance between supply and demand.
Risks of export decline and domino effect
Eddy also warned that the potential decline in palm oil exports is not caused by weak global market, but rather by the limited liquidity of companies.
“If operational funds are insufficient due to withholding, companies could reduce exports. This must not happen because it could have a domino effect,” he said.
Concerns are raised about this domino effect, including a decrease in foreign exchange reserves, supply chain disruptions, and a weakening of Indonesia’s position in the global market.
According to Eddy, if the 50 percent DHE retain remains in effect for a year, bank loans will be the only way for companies to maintain operations.
“If 50 percent is withheld and operational costs are insufficient, companies will have no choice but to borrow from banks. But loans will incur interest. That’s our main objection,” he said.
Eddy emphasized that GAPKI has no objection to the mandatory placement of DHE at the state-owned (Himbara) banks. The main issue lies in the amount and duration of the funds withheld, not the placement location.
As a solution, Eddy proposed the implementation of more realistic DHE holding policy. “If it must be withheld for a year, just 5-10 percent, 10 percent maximum. It will give companies some breathing space,” he said.
He added that the requirement of palm industries’ reserved funds for operations could even exceed 50 percent, making withholding large amounts of DHE considered extremely burdensome.
Eddy also highlighted that GAPKI members’ operational and export financing has so far been conducted not only through Himbara banks, but also through non-Himbara banks and foreign banks operating in Indonesia.
“If suddenly, fund placements are only permitted in Himbara, while our export financing has been conducted in non-Himbara banks, that could create new problems,” he said.
According to Eddy, with Bank Indonesia’s SIMODIS system, DHE monitoring can still be carried out even if funds are placed in non-Himbara banks.
“As long as the foreign exchange is domestic and recorded, it can be monitored. If it is not realized within three months, a warning can be issued immediately,” he added.
Palm oil industry as national economic pillar
Eddy Martono emphasized that the palm oil industries as a whole stand as a major pillar of the national economy, employing more than 16 million workers throughout the industrial chain.
He also noted that during the COVID-19 pandemic, the palm oil industries, from upstream to downstream, are the largest contributor to Indonesia’s foreign exchange earnings, reaching US$39.2 billion, equivalent to more than IDR 600 trillion.
“While many industries were slumping at that time, palm oil had been actually continuing resilient. There were no layoffs; they’re even in need of recruiting new workers,” he said.
Eddy reminded the government to be careful in formulating policies to avoid eroding the competitiveness of this strategic national industry.
“History has shown that Indonesia had once become top producer and exporter of several commodities, including sugar in the past. We were once the second-largest sugar exporter in the world, but now we’re a major importer. We must not let that history repeat itself in the palm oil industry,” he concluded. (*)
Video: Pengusaha Sawit Ungkap “Tantangan” Implementasi Revisi DHE SDA, CNBC Indonesia, 5 Januari 2026. https://www.cnbcindonesia.com/news/20260105101520-8-699618/video-pengusaha-sawit-ungkap-tantangan-implementasi-revisi-dhe-sda
