Call for Indonesian government to leave cooking oil price to market forces
08/06/2022 (New Straits Times), Jakarta - Efforts by Indonesia to curb rising cooking oil prices at home by messing with the free market have disrupted the market and any positive outcome would not last, experts have argued.
What Indonesia needs is simple and straightforward policies that will ensure affordability and availability of cooking oil, said Dr Fadhil Hasan, head of foreign affairs at the Indonesian Palm Oil Association (Gapki).
"Let the price of cooking oil follow the market price. Protect the lower-income group by giving them direct cash transfers to compensate for the high price," he told a discussion on Wednesday (June 8) organised by Jakarta Foreign Correspondents Club (JFCC).
Indonesia early this year imposed a price cap of 14,000 rupiah per litre (S$1.33) on cooking oil sold to consumers, after prices stayed stubbornly high for more than four months. The measure led to distributors and retailers illegally hoarding stocks to avoid selling the merchandise at low price.
Several measures then ensued, including dropping loads of subsidised stocks in the market, requiring producers to allocate at least a fifth of their products for domestic supply and telling them to support price subsidies. None of these proved effective in bringing down the prices.
Around mid-March, scarcity peaked and prompted the government to leave the price of packaged cooking oil, a premium product, to the market in a bid to ensure its availability.
Packaged stocks started to reappear on store shelves, but with prices reaching 25,000 rupiah a litre. Bulk cooking oil price also went up, reaching above the regulated price of 14,000 rupiah a litre and it was hard to find the stock in the market.