INDONESIAN GOVERNMENT LEGAL POLICY TO MAINTAIN THE AVAILABILITY AND STABILITY OF COOKING OIL PRICES COOKING

Cooking oil is one of the most important commodities nationally because of its widespread use for a variety of purposes. Basedon the Central Statistics Agency data, most cooking oil used in Indonesia is cooking oil made from palm oil. Since 2015, the demand for cooking oil in Indonesia has consistently increased upwards.

In January 2022, there was a massive increase in cooking oil prices in Indonesia due to the scarcity of cooking oil availability. Unmitigated, the cost of cooking oil in the general market rose by 73.2 percent or to IDR26,170 per liter compared to the same month in 2021, IDR15,103 per liter.2 In fact, Indonesia is the largest palm oil-producing country globally, with total production in 2021 reaching 46.8 million tons.

The high price of cooking oil in the first quarter of 2022 resulted in panic buying resulting in a shortage of products. Structurally, cooking oil is a primary commodity as valuable as rice, but it is much different in practice. Instead of regulating cooking oil such as rice which is handed over to the Logistics Affairs Agency (BULOG), the Government hands over the “upstream” affairs of cooking oil to the private sector.

In terms of the juridical aspect, on the one hand, the existing regulations should provide certainty on the availability of cooking oil, and the stability
of affordable prices on the other. However, the current regulations are still unable to bridge these two goals. This is shown by the very fast regulatory amendments in the momentum of rising cooking oil prices. These regulations are as follows:

The Minister of Trade Regulation Number 01 of 2022 concerning Provision of Simple Packaged Cooking Oil for Community Needs in a Financing Framework by the Oil Palm Plantation Fund Management Agency (MOTR 01/2022).The government in this regulation provides compensation funds to business actors to obtain financing for simple packaged cooking oil from BPDPKS; the amount of funding for simple packaged cooking oil is calculated based on the difference between the Economic Reference Price and the HET for Simple Packaged Cooking Oil (Article 7 of the Minister of Trade 01/2022). The HET specified in this regulation is IDR14,000 per liter (Article 12).
The Minister of Trade Regulation Number 03 of 2022 concerning Provision of Packaged Cooking Oil for Community Needs in the Financing Framework by the Fund Management Agency for Palm Oil Plantations (MOTR 03/2022).This regulation revokes and replaces the provisions of MOTR 01/2022. The correction based on MOTR 03/2022 includes determining the amount of funding for simple packaged cooking oil, which is calculated based on the difference between the Economic Reference Price (HAK) and HET for Packaged Cooking Oil (Article 7). The determination of HAK at the provincial level is carried out based on the reference selling price at the Business Actor level and is determined every month by the Director-General, while the HET decided in this regulation is IDR14,000 per liter (Article 12).
The Minister of Trade Regulation Number 06 of 2022 concerning the Determination of the Highest Retail Price for Palm Cooking Oil (MOTR 06/2022).

This regulation revokes and replaces the provisions of MOTR 03/2022. Fundamental changes in this regulation include the determination of the HET price, as regulated in Article 3 paragraph (2) MOTR 06/2022, are as follows:
a. IDR11.500.00 per liter for bulk cooking oil;
b. IDR13,500.00 per liter for simple packaged cooking oil; and
c. IDR14.000,00 per liter for premium packaged cooking oil.
The Minister of Trade Regulation Number 11 of 2022 concerning the Determination of the Highest Retail Price of Bulk Cooking Oil (MOTR 11/2022).

This regulation revokes and replaces MOTR 06/2022. Fundamental changes in this regulation include the determination of the HET for Bulk Cooking Oil by IDR14,000.00 per liter or IDR15,500.00 per kilogram (Article 2 of Minister of Trade 11/2022).

The following is a comparison table containing amendments to regulations regarding cooking oil based on MOTR 01/2022, MOTR 03/2022, MOTR 06/2022, and MOTR 11/2022:

The four regulations above also contribute to the chaos in the availability of cooking oil from a juridical perspective. Although it is undeniable that the purpose of the existence of the regulation is well intentioned, the repeal, and replacement in the immediate future have shown the government’s inconsistency in formulating policies related to cooking oil. Thus, it can be seen that the cooking oil policy in Indonesia still has inconsistencies and tends to be reactive. This has implications on a national scale including the scarcity of cooking oil availability to be accessible to the general public. SCN/IAN/RHH

INDONESIAN GOVERNMENT LEGAL POLICY TO MAINTAIN THE AVAILABILITY AND STABILITY OF COOKING OIL PRICES COOKING

The Minister of Trade Regulation Number 01 of 2022 concerning Provision of Simple Packaged Cooking Oil for Community Needs in a Financing Framework by the Oil Palm Plantation Fund Management Agency (MOTR 01/2022).The government in this regulation provides compensation funds to business actors to obtain financing for simple packaged cooking oil from BPDPKS; the amount of funding for simple packaged cooking oil is calculated based on the difference between the Economic Reference Price and the HET for Simple Packaged Cooking Oil (Article 7 of the Minister of Trade 01/2022). The HET specified in this regulation is IDR14,000 per liter (Article 12).
The Minister of Trade Regulation Number 03 of 2022 concerning Provision of Packaged Cooking Oil for Community Needs in the Financing Framework by the Fund Management Agency for Palm Oil Plantations (MOTR 03/2022).This regulation revokes and replaces the provisions of MOTR 01/2022. The correction based on MOTR 03/2022 includes determining the amount of funding for simple packaged cooking oil, which is calculated based on the difference between the Economic Reference Price (HAK) and HET for Packaged Cooking Oil (Article 7). The determination of HAK at the provincial level is carried out based on the reference selling price at the Business Actor level and is determined every month by the Director-General, while the HET decided in this regulation is IDR14,000 per liter (Article 12).
The Minister of Trade Regulation Number 06 of 2022 concerning the Determination of the Highest Retail Price for Palm Cooking Oil (MOTR 06/2022).

This regulation revokes and replaces the provisions of MOTR 03/2022. Fundamental changes in this regulation include the determination of the HET price, as regulated in Article 3 paragraph (2) MOTR 06/2022, are as follows:
a. IDR11.500.00 per liter for bulk cooking oil;
b. IDR13,500.00 per liter for simple packaged cooking oil; and
c. IDR14.000,00 per liter for premium packaged cooking oil.
The Minister of Trade Regulation Number 11 of 2022 concerning the Determination of the Highest Retail Price of Bulk Cooking Oil (MOTR 11/2022).

This regulation revokes and replaces MOTR 06/2022. Fundamental changes in this regulation include the determination of the HET for Bulk Cooking Oil by IDR14,000.00 per liter or IDR15,500.00 per kilogram (Article 2 of Minister of Trade 11/2022).

The following is a comparison table containing amendments to regulations regarding cooking oil based on MOTR 01/2022, MOTR 03/2022, MOTR 06/2022, and MOTR 11/2022: