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Indonesia introduces domestic sales rules for palm oil companies

Posted by Rafael Moro

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The Indonesian government has introduced domestic sales rules for palm oil companies following its month-long temporary export ban on palm and palm oil products, according to a trade ministry regulation document reported by Reuters.

Although the world’s top palm oil producer lifted its export ban on crude and refined palm oil; refined, bleached and deodorised (RBD) palm olein; palm oil mill effluent (POME) and used cooking oil on 23 May it had replaced it with a policy of mandatory sales to the local market at a specific price level, known as a domestic market obligation (DMO), to secure the supply of the vegetable oil at home.

The domestic sales rules would be based on a company’s refining capacity and local demand for cooking oil, the 25 May report said.


Each company’s compliance with the DMO would be used as the basis for the volume they were allowed to export, the regulation reviewed by Reuters stated, with producers and exporters also required to participate in the government’s bulk cooking oil programme.

Although the new domestic sales rules took effect immediately, the Indonesia Palm Oil Association (GAPKI) said some aspects of the DMO would be determined by other rules deriving from the ministerial regulation, such as the technical procedure to calculate the volume of the DMO.

GAPKI secretary general Eddy Martono said the industry was waiting for the government to announce the rules and that no export permit had been issued to date.

In a separate statement, the Indonesian industry ministry issued a regulation stating that data from its bulk cooking oil distribution platform would also be used to determine the issue of export permits.



Companies that had distributed bulk cooking oil between 18 March and 31 May could choose to receive a subsidy from the CPO fund agency or get an export permit, an industry ministry official was quoted as saying in a statement.

Meanwhile, the government was planning to audit all palm oil companies operating in the country and require them to move their headquarters onshore in a bid to improve governance of the sector, senior cabinet minister Luhut Pandjaitan told local media.

Luhut’s spokesperson Jodi Mahardi was quoted as saying the government would audit information such as a company’s land size, partnership with nearby smallholder farmers and tax reports.

The government would also get palm oil companies to set up headquarters in Indonesia, Mahardi said, without giving further details.

Several Indonesian palm oil companies are listed or headquartered in neighbouring Singapore while some Malaysian companies operate plantations in Indonesia through local subsidiaries, according to the Reuters report.

The audit could be launched as early as June, Luhut said, while Mahardi added it could be introduced following the stabilisation of cooking oil prices.

Source: Oils & Fats Internacional (OFI)