Malaysia Benefited from Indonesia's CPO Export Ban: Economist

TEMPO.CO, Jakarta - Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira suggested the government revoke the export ban on crude palm oil or CPO because the policy did not suppress the price of cooking oil in the domestic retail market.

“Those benefitted from the ban are farmers and palm oil industry in Malaysia,” said Bhima when contacted on Monday night, May 16, 2022.

He argued that as long as CPO exports are prohibited, Indonesia has the potential to lose US$3 billion in foreign exchange which will flow to other palm oil producing markets, particularly Malaysia.

In line with that, Indonesia's export rate was predicted to keep declining. The economist assessed that the impact of the export ban will be felt more deeply for the trade balance in May.

Other than eroding foreign exchange reserves, the export ban would harm farmers due to falling prices of fresh fruit bunches (FFB) or Tandan Buah Segar (TBS) and excessive supply of commodities. Meanwhile, after the policy took effect, Bhima saw that the price of cooking oil in the domestic retail market remained above the highest retail price (HET).

The average cooking oil price in the second week of May, he reported, was Rp24,500 per liter. “So it's better to just cancel the ban on CPO exports because there are many disadvantages [for Indonesia],” Bhima remarked.

Coordinating Minister for the Economy Airlangga Hartarto last April announced that the government decided to ban exports of all CPO products, red palm oil (RPO), RBD palm olein, Pome, and used cooking oil, which was effective May 28 in order to prioritize domestic needs and maintain the stability of cooking oil prices in the domestic market.

Read: AGO Extends Detention of 4 Suspects in the CPO Export Criminal Case

FRANCISCA CHRISTY ROSANA