TEMPO.CO, Jakarta - The Palm Oil Agribusiness Strategic Policy Institute (Paspi) highlights the issue of crude palm oil (CPO) prices that remain dependent on market mechanisms. Paspi executive director Tungkot Sipayung, in a session at Tempo's office in Jakarta on Wednesday, June 24, said, "Rotterdam sets the global price benchmark. From the producers' perspective, the Malaysian market sets the benchmark."
Indonesia, he said, despite being the world's largest CPO producer, is lagging behind the European Union and Malaysia in crude palm oil trade. According to Tungkot, the country's company-based export mechanism puts Indonesia at a competitive disadvantage.
Compared to the EU, which is not a palm oil producer but generates annual foreign earnings of US$35 billion per year, Indonesia struggles to achieve similar output despite producing over 16.8 million hectares of oil palm plantations.
Tungkot believes the recently adopted single-gate export policy could improve domestic oil palm industries. "The regulation that transforms the export mechanism into a single-gate through PT Danantara Sumberdaya Indonesia (DSI) could open the path for Indonesia to control the global CPO price," Tungkot said.
Tungkot also hopes that the new mechanism could drive more CPO export earnings into Indonesia.
Meanwhile, Nailul Huda, the director of the Center for Economic and Law Studies (Celios), questioned the market role if DSI were able to determine commodity prices. "Do we no longer need the market? This is something we have long discussed, and suddenly, it is disrupted by a policy from PT DSI," Nailul remarked.
Nailul then raised concerns about the potential optimization of state capitalism due to the government's prominent role in export control. This, he said, would impact private companies as they would be sidelined.
Read: Indonesia's CPO Exports Plunge Across Nine Major Markets
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