In an effort to ensure a sufficient domestic supply, Indonesia will tighten export regulations for palm oil beginning on January 1 by allowing fewer shipments abroad for every tonne sold domestically. 

Less than the current ratio of eight times, exporters will be permitted to ship six times their domestic sales volume, according to a new regulation that was confirmed by an industry official and reviewed by the news agency Reuters. 

According to Septian Hario Setio, a senior official at the Coordinating Ministry for Maritime and Investment Affairs, "to secure domestic supply, especially for the first quarter of 2023.". 

According to Seto, the ratio will be assessed on an ongoing basis while taking into account factors such as prices and availability of cooking oil in the domestic market. 

Amid worries that the price of cooking oil would skyrocket out of control, Indonesia earlier this year implemented export restrictions on palm oil products. 

A brief ban on Indonesian edible oil exports shook markets and made existing supply issues worse,but it also resulted in a huge increase in domestic inventory. 


Currently, Indonesia requires businesses to sell a portion of their output domestically in order to receive export licenses. This requirement is known as a "domestic market obligation" (DMO). 

In a meeting with the government last week, Indonesian Palm Oil Association (GAPKI) Secretary General Eddy Martono stated that there were still concerns about the supply of cooking oil due to the government's biodiesel program and predictions of lower palm oil output in the first quarter. Beginning on February 1, Indonesia intends to raise the required percentage of palm oil to 35%. 

In March 2023, the month when food demand, including that for cooking oil, is anticipated to rise, the majority-Muslim nation in the world will also observe Ramadan. 

Businesses would abide by the rule, but in the short term, the new export ratio needs to be regularly assessed, according to Eddy.

SOURCE: REUTERS