Indonesia revamps pricing by introducing subsidies for bulk cooking oil but maintains DMO policy

Indonesia will remove the retail price caps for packaged cooking oil and will instead raise the price cap of bulk cooking oil to Rp 14,000/liter or US$0.98 from Rp.11,500 (US$0.80) previously and provide subsidies to maintain the prices. The changes were announced yesterday and will be effective from the 1st of April and can last up to a year.

Under the new measures, the packaged cooking oil sold at retailers can be priced according to prevailing market rate, effectively removing the Rp.14,000/liter price cap on premium oils and Rp.13,500/liter on second tier quality. The caps were introduced in January but escalating prices led to panic buying despite limiting buyers to 2 liters each resulting in scarcity at retailers.

Levies collected from palm exports by the BPDPKS body will fund the subsidies according to the government announcement. The policies were announced to ensure supply and maintain purchasing power of consumers.

Indonesia consumes about 2.40 million kiloliters of bulk cooking oil every year—reported Bloomberg.

Meanwhile the domestic market obligation (DMO) policy was left intact, which requires 30% of planned export to be allocated for domestic use.