"So the main cause that must be corrected is the price of domestic cooking oil to break away from dependence on international palm oil prices,” he remarked during an online public discussion on Thursday.
He made the statement in relation to the hike in the price of cooking oil in the country on the back of a rise in global palm oil prices, despite Indonesia being one of the largest crude palm oil (CPO) producers in the world.
The government has acknowledged that there is a system of policies related to domestic cooking oil prices that are too lenient to trade mechanisms, Nurwan explained.
Amid the COVID-19 pandemic, it has been realized that this condition cannot be allowed to continue, he said.
"The price of domestic cooking oil should not depend on international palm oil prices," Nurwan added.
For this reason, in making policies to reduce the price of domestic cooking oil, the government is considering several things, he informed.
First, the government does not want to interfere with the welfare of oil palm farmers, he said.
Next, the government is also trying to maintain the international trade order, where palm products are the second-largest export contributors to Indonesia's foreign exchange reserves, he informed.
Last, the government is seeking to maintain the supply and affordability of cooking oil prices for the Indonesian people, he added.
"So, the government's concentration at this time is how to release the shackles of dependence on international palm oil prices," Nurwan remarked.
According to Nurwan, the consideration regarding cooking oil prices has been tiered, starting from a simple packaging mechanism, fixing a single price, to Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO), to maintain supply.
In fact, the government has also prepared other policies in case the latest policies do not work as expected, he added.
"We continue to monitor how it develops," Nurwan said.
The government is working to ensure that the supply of cooking oil is safe and sufficient to meet the people's needs for the next six months, main expert staff of the Presidential Staff Office (KSP), Edy Priyono, said earlier.
He made the statement in a press release issued here on Thursday following the implementation of the government's one-price cooking oil policy on Wednesday, under which the price of cooking oil has been capped at Rp14 thousand per liter.
"The Trade Ministry has issued the Trade Minister's Regulation Number 1 of 2022, which, in essence, serves as the basis for cooperation between the government and producers in the provision of subsidized cooking oil. This is the basis for the government's force to issue the one-price policy of Rp14 thousand per liter, especially in terms of supply guarantees," he explained.
The government is increasing efforts to cover the cooking oil price difference, which include increasing the subsidy from Rp3.6 trillion to Rp7.6 trillion, he informed.
This step has been taken to meet the cooking oil needs of households and micro and small scale industries, he added.
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Translator: Sella P, Azis Kurmala
Editor: Sri Haryati
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