Nurwan stated that the policy will break the price linkage between cooking oil and international Crude Palm Oil (CPO).
"The Indonesian government has decided to cut the link between cooking oil prices and the international CPO prices by implementing DMO and DPO regulations," he stated on Tuesday.
He later noted that domestic cooking oil producers had, so far, purchased CPO as raw material for vegetable oil at global prices.
Nurwan notified that currently, only a few cooking oil producers had their own palm oil plantations.
The increase in the vegetable oil prices worldwide since last year led to a rise in the palm oil price as a raw material for cooking oil.
The government had earlier set the highest retail price (HET) for cooking oil at Rp14,000 per liter. The policy has mandated CPO producers in Indonesia to opt to export their harvest due to the high global CPO price rather than sell it as domestic cooking oil, which has a limited price.
Hence, the government implemented a DMO policy that made it mandatory for CPO producers in Indonesia to allocate 20 percent of their total export volume for meeting domestic needs.
"All CPO exporters must comply with this regulation to facilitate the supply of cooking oil in Indonesia," he noted.
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Furthermore, for the domestic selling price of CPO, specifically DPO, the government applies the highest price of CPO at Rp9,500 per kg or in the form of oil at Rp10,300 per kg. Thus, the highest price of cooking oil in the domestic market will lie at Rp14,000 per liter.
Nurwan also noted that the maximum price for premium packaged cooking oil is at Rp14,000 per liter, simple packaging cooking oil priced at Rp13,500 per liter, and bulk cooking oil costing Rp11,000 per liter.
He ensured that the supply of CPO and national cooking oil was safe.
"The problem is we have sufficient stocks, but the price is not affordable. We try to overcome the problem," he added.
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Translator: Aditya Ramadhan, Resinta S
Editor: Rahmad Nasution
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