Agriculture & Food

According to Huacheng Import and Export Data Observation, on Thursday (April 27th) local time, the Indonesian Ministry of Trade announced that it will relax domestic sales regulations for palm oil starting from May and allow more palm oil exports.

As the world's largest producer of palm oil, Indonesia accounts for 60% of global palm oil supply. According to the Indonesian Palm Oil Association (GAPKI), the country produced 51.3 million tons of palm oil last year and exported a total of 33.7 million tons, according to Huacheng Import and Export Data Observation.

Indonesia has abundant natural resources, and besides palm oil, its reserves of key commodities such as thermal coal and nickel ore are among the top in the world. However, Indonesia is known for its resource nationalism and has previously implemented a policy called "Domestic Market Obligation" (DMO) to restrict the export of resources such as coal and palm oil.

Indonesia will regularly adjust the specific requirements of DMO based on market conditions. According to a new requirement released by the Indonesian Ministry of Trade on Thursday, the mandatory domestic sales threshold for palm oil producers in the country will be lowered to 300000 tons starting from May 1st.

The Indonesian government currently limits the export ratio of palm oil to 1:6, which means palm oil exporters can export six times the sales volume in the domestic market. Starting from May 1st, this number has been tightened to four times, but the Indonesian government has relaxed the proportion of some edible oil products. For example, manufacturers selling simple packaged edible oils are allowed to export up to 9 times their domestic sales, as reported by Huacheng Import and Export Data Observation.

Isy Karim, a senior official from the Indonesian Ministry of Trade, said that overall, more palm oil will be allowed to be exported.

The Indonesian government will also restore the previously frozen palm oil export licenses worth approximately 3 million tons, which will be allowed to be used in stages over the next 9 months.

At the same time, officials from the Indonesian Ministry of Trade emphasized that the government will continue to improve its domestic palm oil distribution policy to ensure stable palm oil prices nationwide.

After the outbreak of the Russia-Ukraine conflict, the global price of edible oil soared. The Indonesian government has repeatedly adjusted its palm oil export policy. Last year, the country once banned all palm oil exports. Huacheng Import and Export Data Watch reported.

According to Huacheng Import and Export Data Observation, in early February this year, the Indonesian government suspended two-thirds of palm oil exports to ensure its domestic edible oil supply before the Islamic month of Ramadan.