As Indonesia announced a ban on crude and refined palm oil exports, prices of crude palm oil saw a sharp decline of 4% in the world market.
The ban, effective today, is in complete contrast to the announcement the Chief Economic Minister of Indonesia had made a day prior.
Airlangga Hartarto had said that the ban would only cover refined, bleached, and deodorized palm olein.
The reason behind the decision
The President of Indonesia, Joko Widodo said his people’s need for affordable food comes first, and for now, revenue concerns are secondary.
Indonesia is undergoing a domestic shortage of cooking oil due to jumping prices, and the current stock of palm oil available for export can fulfill the demand.
“Once domestic needs have been met, of course, I will lift the export ban because I know the country needs taxes, foreign exchange, a trade balance surplus, but meeting the people's basic needs is a more important priority,” Joko Widodo added.
Bulk cooking oil prices in Jakarta reportedly reached around 19,000-20,000 rupiah ($1.32-$1.39) on Wednesday.
According to industry officials in Jakarta, the ban would not be in effect for more than a month due to the limited infrastructure for oil storage in the country.
