TEMPO.CO, Jakarta - Center of Reform on Economics (CORE) director Mohammad Faisal on Tuesday conveyed his opinion on the government’s plan to revoke the crude palm oil domestic market obligation (DMO) policy. He argues that the current issue related to cooking oil scarcity lies in the distribution aspect.

“If we trace the problem of scarcity of cooking oil, the issue actually lies at the distribution level from producers to consumers rather than supply problems,” said Faisal to Tempo on July 26.

Moreover, he believes the domestic supply of cooking oil has indeed increased and the amount is still very significant. If the DMO obligation is removed, consumers will not be affected.

However, he sees that the DMO policy is still needed to ensure the supply of CPO on the upstream side. Because the distribution of cooking oil has not been smooth, it is deemed necessary to apply DMO in a certain measure so that food shortages do not recur.

"For me, actually DMO is needed at a certain level up to 10 to 20 percent," he said. Thus, entrepreneurs can still export CPO, but domestic supply is maintained. On the other hand, he stressed that the issue of cooking oil distribution is an urgent matter and needs to be addressed immediately.

He asserts that there must be a policy that can provide a solution to the supply problem, but does not ignore the export activities of producers.

"Because palm oil is the biggest market for exports," he said. If exports are hampered, Faisal predicts that business actors will face the threat of bankruptcy. In addition, farmers will be affected because the price of palm oil fresh fruit bunches (FFB) drops.

According to Faisal, there needs to be a bigger role than SOEs in the palm oil industry so that the distribution functions for the domestic supply of oil can run well. In addition, the provision of affordable cooking oil prices can be carried out by state-owned companies.

RIANI SANUSI PUTRI

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