SGX-listed palm oil players under pressure as Indonesia’s commodity export overhaul stokes fears
Companies face heightened regulatory risks and the scale of policy roll-out poses execution hurdles: analysts
29/03/2026 (The Business Times, Singapore), Singapore - Shares of Singapore Exchange (SGX)-listed palm oil players have come under pressure after Indonesia unveiled plans to centralise exports of key natural resources through a state-owned enterprise.
The move has raised fresh concerns over policy risks for plantation firms with exposure to the country.
Even as analysts remain constructive on crude palm oil (CPO) prices amid tightening global supply, they warned that Indonesia’s latest move could weigh on valuations and cloud the outlook for regional planters.
Industry observers noted that Jakarta’s efforts to tighten control over strategic commodity flows are aimed at increasing state revenue and curbing under-invoicing.
Indonesia is the world’s largest exporter of coal, palm oil and ferronickel, and President Prabowo Subianto is pushing for tighter state control over those flows.
Nirgunan Tiruchelvam, head of consumer and Internet at Aletheia Capital, said the policy reflects an ambition to establish regional price-setting authority.
“Indonesia aims to shift pricing leverage away from major importing nations like China, India and Japan,” he said, comparing the strategy with market management mechanisms used by Opec.
He added that Jakarta’s latest move is a bid to retain a larger share of the CPO processing value chain within the domestic economy.
Between May 20 – when the announcement was made – and May 28, the shares of SGX-listed palm oil players with operations in Indonesia retreated. Bumitama Agri : P8Z -7.88% led the pack with a 12.1 per cent decline.
Uneven impact
The impact of Jakarta’s latest move is expected to vary among SGX-listed planters, depending on their level of export exposure.
“The regulations may erode Indonesian exporters’ bargaining power and margins, although a meaningful tightening in supply could see higher global palm oil prices partially offsetting earnings pressure,” said OCBC analysts Ada Lim and Chu Peng.
“More broadly, the pace and unpredictability of regulatory changes in Indonesia raise concerns, pointing to an elevated regulatory risk environment.”
The analysts noted that domestic players such as Bumitama Agri, which sources 100 per cent of its revenue from Indonesia, face limited direct impact from the policy.
However, they flagged a tail risk that the policy could indirectly affect domestic pricing.
If producers are required to sell to the state-owned enterprise below market prices, domestic end-consumers may also seek lower purchase prices from plantations, noted the analysts.
“It is not clear if the policy will eventually extend to downstream derivative products; if downstream products are in scope, then this provides end-customers with an even greater incentive to lower purchase prices to offset potential margin compression,” they said.
Golden Agri-Resources : E5H +1.89%’ greater exposure to upstream palm oil operations and sensitivity to CPO price movement makes it “more sensitive to changes in export dynamics”, with tighter controls “likely to put added pressure on its margins”, said Chu and Lim.
Separately, Indonesian authorities are investigating 10 CPO exporters, including Wilmar International : F34 -3.69%, for allegedly engaging in under-invoicing and transfer-pricing practices.
“The development comes at a sensitive time, with reputational risks likely to weigh on investor sentiment,” said the OCBC analysts.
But they noted that Wilmar’s integrated business model and scale “could provide some cushion relative to smaller peers”.
Amanda Foo, an analyst at Macquarie Equity Research, similarly noted that while the Indonesian government’s exact plans for implementation remain unclear, “the risk of potential interventions… warrants a higher risk premium for Indonesia-exposed planters”.
Potential interventions could include tighter export monitoring, domestic market obligation-style mechanisms and temporary price controls, she added.
Taking these risks into account, Macquarie lowered its price target on Bumitama Agri by 14 per cent to S$1.98 from S$2.30.
It also cut its price target on First Resources by 14 per cent to S$3.35 from S$3.90, and reduced Wilmar’s price target by 3 per cent to S$3.90 from S$4.
Meanwhile, the research house maintained its “outperform” rating on Bumitama Agri and First Resources given their “strong upstream leverage and operational quality”.
Foo, however, noted that their “concentrated Indonesia exposure leaves valuations more vulnerable to potential policy interventions”.
Macquarie rated Wilmar as “neutral” due to its “comparatively lower direct leverage to higher CPO prices and greater exposure to evolving regulatory risks across multiple jurisdictions”.
Resource nationalism gaining traction globally
OCBC’s analysts noted that resource nationalism has been gaining traction globally, partly in response to geopolitics.
For example, the Democratic Republic of the Congo banned cobalt exports in February 2025 to stem an oversupply-driven price slump.
China also reduced its rare earth mineral export quotas by 40 per cent in 2020 on the premise that market prices were undervalued, and further expanded controls in 2025 by requiring government approval for exports.
In these cases, export policies were used to restrict supply, causing a sharp and sustained price surge.
“Indonesia’s policy is framed as an anti-fraud measure rather than volume restriction, making the direct price impact less certain,” said the OCBC analysts.
The scale of Indonesia’s policy is broader, targeting multiple commodities at once, which amplifies investor uncertainty and could complicate ground-level execution, they added.
Lakshmanan R, senior director and head of South and South-east Asia corporates research at CreditSights, also drew comparisons with Opec.
He noted similarities in “centralised pricing power and supply control, state capturing more value from within the chain, and strategic use of exports for achieving macro goals”.
However, there is a key structural difference: “Opec has a few concentrated players, so it is easy to execute. But in Indonesia these commodity sectors are fragmented with several private players, so the implementation, coordination and supply chain will be much harder.”
Hurdles to implementation
Industry observers noted that the scale and timeline of the policy present implementation challenges.
Oriano Lizza, a sales trader at CMC Markets, said: “Jakarta is betting it can repeat the nickel playbook.”
He noted that the value of Indonesia’s nickel export earnings have grown 10 times since 2013, stabilising above US$30 billion in 2022 after an export ban on nickel was implemented in 2020.
But he said that the analogy breaks down on three fronts.
First, this policy covers CPO, coal and ferroalloys simultaneously funnelling US$65 billion in annual export value through a single, untested state-owned enterprise.
Second, the plan calls for a three-month transition to full centralisation by September 2026. In contrast, the nickel ban followed years of gradual signalling, he said.
Lastly, he flagged the context in which this policy is being rolled out. The Indonesian rupiah hit an all-time low of 17,706 rupiah to US$1 on the day of the announcement, while the Jakarta Composite Index was down more than 26 per cent in the year to date.
“Indonesia is attempting a nickel-style transformation across three commodity classes, but without the industrial policy scaffolding that made nickel work,” he said.
Aletheia Capital’s Tiruchelvam said that it will be “very difficult” for these measures to completely change how palm oil prices are set. Because the palm oil market is structurally moving towards a shortage, prices are likely to see a strong rally regardless, he added.
“It’s difficult to say at this point. What they need to spell out is the exact nature of this (state-owned enterprise), how long and what the mandate is, because at this point we are just relying on broad statements, so we need more clarity.”
He said that while there are precedents of countries setting up similar organisations, there are very few instances of a player of this scale – which dominates palm oil, ferronickel and coal – suddenly creating a common board for exports.
“Each commodity has its own nuance, its own set of intermediaries, and it’s very difficult for them to change the way commodities are traded purely by creating this agency that’s going to centralise things,” he added.