The idea of building a trading system for Indonesian CPO commodities through the development of the Indonesian CPO exchange must be supported and discussed as a step to make Indonesia a barometer of world palm oil.
Jakarta (ANTARA) - The Indonesian government and business players have agreed to build a reference price for crude palm oil (CPO) in the global market through the development of a credible and transparent commodities exchange in the country.

The development of the Indonesian CPO market is very important for strengthening Indonesia's position as the largest producer of palm oil in the country, the marketing director of Nusantara Plantation Holding of PTPN III, Dwi Sutoro, said in Jakarta on Friday.

"Currently, Indonesia still uses the CPO price reference from the Malaysia Exchange (MDEX) and the Rotterdam Exchange in the Netherlands. Using foreign exchanges sometimes has an impact on the balance of supply and demand in the country," he explained.

According to him, currently, in Indonesia, there is no commodity exchange capable of carrying out the three functions of price discovery, price reference, and hedging.

For this reason, he has advised the government to take advantage of existing CPO trading systems, such as that of PT Kharisma Pemasaran Bersama Nusantara (KPBN). The strategy is important if the Ministry of Trade wants to pursue the target of establishing a CPO reference price in June this year.

According to Sutoro, the CPO exchange should ideally discharge the three functions of price discovery, price reference, and hedging through a fair, efficient, transparent, and reliable process.

"The idea of building a trading system for Indonesian CPO commodities through the development of the Indonesian CPO exchange must be supported and discussed as a step to make Indonesia a barometer of world palm oil," he said at the “Indonesian Palm Oil Seminar,” which was themed “Indonesia's Strategy to Become a World CPO Price.”

The involvement of the government, state-owned enterprises (BUMNs), and the private sector is expected to create positive synergies in designing a fair, efficient, transparent, and reliable Indonesian palm oil trade system, he added.

Meanwhile, head of the Commodity Futures Trading Regulatory Agency (Bappebti), Didid Noordiatmoko, said that the strategy to set a reference price for Indonesian CPO is part of efforts to build sovereignty for the palm oil industry in the country.

For this reason, Bappebti is preparing a new regulation that will require the export of crude palm oil (CPO) through commodity futures exchanges.

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The regulation is still being prepared and will require a careful study of its impact on the domestic market obligation (DMO) policy and exporters. Then, CPO products that must be exported through futures exchanges will also be reviewed. It will also cover exchange mechanisms for easing trading.

Director of planning and fund management at the Oil Palm Plantation Fund Management Agency (BPDPKS), Kabul Wijayanto, said that he agreed with the proposed establishment of a reference price for Indonesian CPO commodities, which is expected to serve as a reference for global palm prices.

In addition, easily accessible commodity reference prices can be used by policymakers and make it easier for BPDPKS to prepare program spending plans, he pointed out.

According to the director of PT KPBN, Rahmanto Amin Jatmiko, KPBN already has the requirement for an exchange that allows it to officially become the Indonesian CPO exchange in a relatively shorter time compared to other exchanges or the formation of a new exchange.

The CPO KPBN price has become a benchmark price for provincial fresh fruit bunches (TBS) and the number of biodiesel incentives, he pointed out. Besides, it is also serving as a price reference for Oilworld, Indef, Gapki, Bloomberg Intelligent Analysis, and Kemenko Marves.

He said that the daily stock exchange carried out at KPBN began in 1968 and was verified by the BPK RI in 2017.

"KPBN is a subsidiary of PTPN so it can carry out its mission as a professional corporation as well as a mission for the national interest, according to government directives," said Jatmiko.

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Translator: Subagyo, Cindy Frishanti Octavia
Editor: Yuni Arisandy Sinaga
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