ABSTRACT Literature has demonstrated that trade liberalization generally improved societal well being and overall economic wellbeing. The natural functioning of comparative advantage was said to open up markets and encourage export through trade liberalization. Past research demonstrated evidence of domestic price disciplining and the elimination of excess profits of domestic businesses with market power functioning in oligopolistic marketplaces when domestic markets were exposed to international competition. The removal of inefficiencies through increased competition led to a rise in production (Verdoorns Law). It was also recognized, though, that in some instances, unmanaged liberalization may lead to sizable foreign companies establishing themselves as oligopolies or even monopolies in the recently liberalized market. Due to their market dominance, these companies may operate contrary to the rules of a free and open market, such as by engaging in anticompetitive behavior. The main form of palm oil is produced, known as crude palm oil (CPO). Palm oil is the world’s most widely used vegetable cooking oil. Indonesia and Malaysia produce 57% and 27% of palm oil available in the global market, respectively (Ritchie Roser, 2021). Cooking oil prices in Indonesia are directly impacted by international CPO prices because it is a commodity that is traded globally. Due to the rising demand for biofuel as a result of the global economic recovery and the diminishing productivity of oil palm plantations in Indonesia and Malaysia, global CPO prices dramatically climbed during 2021 and into 2022 (Nafisah Amanta, 2022). As a result, and in spite of its fundamental need, inexpensive cooking oil was hard to come by. Indonesia is a significant and promising partner for Vietnam, and it cherishes Vietnams status and role as one of the ASEAN nations with the greatest impact. Numerous cooperation agreements and accords in numerous sectors have been negotiated between Vietnam and Indonesia. There are other mechanisms for bilateral collaboration in place as well. By examining the topic, The Indonesian Governments temporary export restriction on Crude Palm Oil (CPO) in 2022 and its impacts on the global market, with implications for Vietnam as an importer”, we would have chance to understanding thoroughly the impacts of exportban policy and domestic application of Indonesia Government towards optimization on the basis of the current system of CPO’s products situation and export sector in the world and in Indonesia and estimation of future development in the industry.
GROUP 15 TOPIC: the indonesian government's temporary export restriction on crude palm oil (cpo) in 2022 and its impacts on the global market, with implications for vietnam as an importer INTERNATIONAL TRADE POLICY TMAE301.2 Table of Contents ABSTRACT INTRODUCTION Literature review Methodology: The research method uses descriptive qualitative Information collection method Information processing method: combination of quantitative and qualitative Objectives .4 Scope of Research: OVERVIEW 1.1 A guide to CPO export (2018-2022) 1.1.1 Definition and value of Crude Palm Oil 1.1.2 Features of CPO products 1.2 CPO's products export contribution to the world's economy (2018-2022) 1.2.2 Exporters and consumers of CPO's products 1.2.2.1 Exporters of CPO’s products in the world .9 1.2.2.2 Consumers of Indonesian CPO’s products in the world 10 Indonesia as CPO's products exporter before the restriction 11 2.1 Production of Palm oil in Indonesia (2018-2022) .11 2.2 Export Duties of Indonesian CPO's products (2018-2022) 12 The Indonesian Government's export restriction on Crude Palm Oil (CPO) in 2022 .15 3.1 The issuance of Ministry of Trade Regulation No of 2022 on February 2022 and MOT Regulation No 11 of 2022 15 3.2 Purposes of the temporary restriction 15 3.3 The outcome of the temporary export bans 16 3.4 Changes from the government towards the outcomes .16 Current situation and expected developments 18 4.1 Current situation of Indonesia in the global market .18 4.2 Expected development 18 Implications for VN as an importer 20 5.1 Reactions to the temporary restriction .20 5.2 Overall impacts on trade market 20 5.3 Draw lessons for policy 21 CONCLUSION 22 REFERENCES 23 ABSTRACT Literature has demonstrated that trade liberalization generally improved societal wellbeing and overall economic well-being The "natural" functioning of comparative advantage was said to open up markets and encourage export through trade liberalization Past research demonstrated evidence of "domestic price disciplining" and the elimination of excess profits of domestic businesses with market power functioning in oligopolistic marketplaces when domestic markets were exposed to international competition The removal of inefficiencies through increased competition led to a rise in production (Verdoorn's Law) It was also recognized, though, that in some instances, "unmanaged" liberalization may lead to sizable foreign companies establishing themselves as oligopolies or even monopolies in the recently liberalized market Due to their market dominance, these companies may operate contrary to the rules of a free and open market, such as by engaging in anticompetitive behavior The main form of palm oil is produced, known as crude palm oil (CPO) Palm oil is the world’s most widely used vegetable cooking oil Indonesia and Malaysia produce 57% and 27% of palm oil available in the global market, respectively (Ritchie & Roser, 2021) Cooking oil prices in Indonesia are directly impacted by international CPO prices because it is a commodity that is traded globally Due to the rising demand for biofuel as a result of the global economic recovery and the diminishing productivity of oil palm plantations in Indonesia and Malaysia, global CPO prices dramatically climbed during 2021 and into 2022 (Nafisah & Amanta, 2022) As a result, and in spite of its fundamental need, inexpensive cooking oil was hard to come by Indonesia is a significant and promising partner for Vietnam, and it cherishes Vietnam's status and role as one of the ASEAN nations with the greatest impact Numerous cooperation agreements and accords in numerous sectors have been negotiated between Vietnam and Indonesia There are other mechanisms for bilateral collaboration in place as well By examining the topic, "The Indonesian Government's temporary export restriction on Crude Palm Oil (CPO) in 2022 and its impacts on the global market, with implications for Vietnam as an importer”, we would have chance to understanding thoroughly the impacts of export-ban policy and domestic application of Indonesia Government towards optimization on the basis of the current system of CPO’s products situation and export sector in the world and in Indonesia and estimation of future development in the industry Despite our best efforts at research and analysis on the subject, we are only able to analyze and evaluate on a very basic level due to time constraints and limited knowledge With limited information, there will be several flaws; the writers hope to receive feedback from Mrs Vũ Thị Huyền Phương for further improvement Our sincere appreciation INTRODUCTION Literature review - The WTO agreements: They cover a wide range of topics, including: agriculture, textiles and apparel, finance, telecommunications, government acquisitions, industrial standards and product safety, laws governing food safety, intellectual property, and much more But there are a few straightforward, essential ideas that appear in all of these publications The multilateral trading system is built on these tenets (Hoekman, B.M., Mattoo, A and English, P (2002)) - Comparative advantage: theory, empirical measures and case studies: theory, analytical tool and case studies of comparative advantage (Tri WIDODO, 2009) - Trade Agreement between the Government of the Republic of Indonesia and the Government of the Socialist Republic of Vietnam: The social character of labor, the advancement of civilized human-human connections, and the lengthy history of growth and origin all contribute to the inevitable process of international integration People who wish to flourish in society must be closely connected to one another A nation that wishes to develop must collaborate with other nations on a global scale (Trade Agreement between Indonesia and Vietnam (1995)) Methodology: The research method uses descriptive qualitative Information collection method - Introspection and bonded approach: personal consultation of experts, articles… - Individual and comparative approach: year-by-year data and transportation index comparisons, table ranking order, policies over the years - Historical and Logical Approach: Reviewing past metrics, the impact of events on the data - Sources of data: The Central Statistics Agency [BPS], the Indonesian Ministry of Industry, the United Nations Commodity Trade Statistics, academic papers on the competitiveness and oil palm development strategy, and CPO export and import data [code HS 151110] are the sources of the statistical data used in this study Information processing method: combination of quantitative and qualitative - Quantitative: gather information from statistical documents on web pages Refer to econometric models in previous studies, review charts, tables, and graphs, and then make preliminary judgments about the information gathered - Qualitative: Visually visualize the relationship between elements in the structure of things, generalize the relationships of things Objectives: One of the plantation products that plays a significant economic role in Indonesia is palm oil, which is also exported as a currency-earning product for oil and gas Crude Palm Oil (CPO), the primary product of palm oil, is produced In accordance with the rising demand for CPO in export destination nations for both biodiesel and food raw materials, CPO's export volumes as a key product continue to rise However, the mix of exports changed from CPO to goods derived from palm, specifically RBD palm olein and PFAD, in 2009 when the customs regulation went into effect Scope of Research: In general, the Study is conducted for the purpose of proposing and determining the impacts of export-ban policy and domestic application of Indonesia Government towards optimization on the basis of the current situation of CPO production and export sector in the world and in Indonesia and estimation of future development in the industry OVERVIEW 1.1 A guide to CPO export (2018-2022) 1.1.1 Definition and value of Crude Palm Oil Oil from the core of oil palm fruit is used to make palm oil, an edible oil Red is the color of the pulp The high inactive vitamin A content is the reason why crude palm oil has a hue that is naturally reminiscent of pulp It is distinct from coconut oil or kernel oil It is frequently combined with or blended with coconut oil to create a highly saturated vegetable fat that is also used in cooking CPO is mostly utilized in South-East Asia, West Africa, and some regions of Brazil for cooking purposes Due to its inexpensive price, commercial kitchens use it Because of the high level of saturated fats, it is less healthful than its competitors Nigeria, Colombia, Indonesia, and Malaysia are the top four CPO producers They are significant palm oil exporters Malaysia produces around a quarter of the world's palm oil, with Indonesia producing more than half Between 75 and 85% of the world's supply comes from Indonesia and Malaysia combined, although 42 other nations also produce palm oil, notably Thailand, Colombia (which has dramatically increased production since the end of the internal war), and Nigeria Mumbai is one of the main commercial hubs in India, and is a net importer of crude palm oil [NCDEX (2022)]Additionally, it is used to create biodiesel, and glycerin is one of its byproducts Furthermore, because crude palm oil is a processed good, demand and supply are constant year-round Parameters for performance review of commodity - NCDEX (2022) It is common for palm oil to be exported; in 2019, an estimated 65% of total palm oil production was exported However, as seen by the accompanying graph, that percentage has somewhat decreased recently The palm oil market is anticipated to reach a value of USD 67.3 billion in 2022 and to grow at a CAGR of 5.1% from 2023 to 2030 The market's exponential expansion is being driven by demand from the food, beverage, biofuel, energy, personal care, and cosmetics industries Major manufacturers are located in the area because raw materials are readily available there The market is intensely competitive and broad in scope as a result of the presence of multiple all-scale companies who fight for market share through high production, excellent distribution networks, high-quality products, and a variety of competitive methods.[ Baliño, S et al (2020)] The market for palm oil was estimated to be worth USD 67.3 billion in 2022, and from 2023 to 2030, it is expected to increase at a CAGR of 5.1% Demand from the food, beverage, biofuel, energy, personal care, and cosmetics industries is driving the market's exponential growth Due to the region's easy access to raw materials, major manufacturers are concentrated there Due to the presence of several all-scale players who compete for market share through high production, superior distribution networks, high-quality products, and a variety of competitive strategies, the market is both fiercely competitive and wide-ranging in scope [(2023) Grand View Research.] 1.1.2 Features of CPO products 1.1.2.1 Prices of CPO products In the world, more than 17 different oils and fats are produced and sold For these oils and fats, a broad variety in price is not unusual The variances rely on market arrangements and the unique characteristics of various economic sectors There seem to be considerable pricing variations even among oils of the same sort that are manufactured 1.1.2.2 CPO's products export duty development Some of these items can be exported duty-free, however, some nations charge for exports Similar to that, several nations that import similar goods have put levies on them In the case of vegetable oils, imports of unprocessed oils are subject to just modest charges, but imports of oils that have undergone further processing are subject to significantly higher tariffs Some exporting nations place higher tariffs on crude vegetable oil exports and lower duties on processed oil exports Similar oil-producing nations compete with one another for markets Tariffs and pricing are two ways that competition may manifest The government of a nation may impose tariffs or charges on items exported from that nation in order to raise money or to safeguard the domestic economy On the other hand, by taxing solely the foreign good, importing nations put tariffs on imports to benefit home manufacturers who are subject to import competition The more expensive it is for customers to purchase foreign goods, the more they will turn to domestic providers, who will gain from the increased demand and higher prices brought on by the levy 1.2 CPO's products export contribution to the world's economy (2018-2022) 1.2.1 Market share of the products The bulk of Indonesia’s palm oil was made up of crude palm oil and refined palm oil, with crude palm oil (CPO) exports reaching around 25.9 million metric tons in 2020 In that year, the export value of this commodity was about 17.3 billion U.S dollars (According to Statista) The main export market for Indonesian CPO was India, which made up more than 60 percent of the total CPO exports in 2020 India was in turn the world’s largest importer of palm oil in that year In 2019, India introduced higher import duties on palm oil, leading to a decline in demand from this market However, Indonesian palm oil exports were buffeted by increased demand from China, which sought alternative vegetable oil supplies due to restrictions caused by the trade war with the U.S (According to Statista) According to Figure 1, with the exception of 2020, Indonesian CPO dominated the value of CPO exports on the international market from 2000 to 2019 This demonstrates that Malaysia, one of the major exporters, is more focused on refined palm oil Processing Indonesian CPO still lags well behind Malaysia Only 59.66% of CPO can be converted into derivative products in Indonesia, and only 40.34% can be exported The COVID-19 outbreak, the lockdown, and the fall in economic growth in Indonesia and several other nations, particularly those that are the primary palm oil export destinations, all contributed to the decline in demand for Indonesian CPO in 2020 In this regard, Li and Gan (2014) predict that Malaysian CPO exports and other CPO producing countries in the world are expected to continue to increase until 2023, although domestic consumption will increase due to population growth and the need for CPO derivative products The results of the market share index analysis show that the share of Indonesia’s CPO exports in the European Union market ranges from 5% to 25.12%, higher than other CPO importing countries in Italy, Spain, and Germany The high percentage of CPO exports shows that Indonesia is a major exporting country in the EU market to meet the EU industry’s vegetable oil needs (Figure 2) This data shows that there has been a decline in demand for CPO exports since 2012 after a negative campaign with the label “Palm Oil free” and propaganda to switch to local vegetable oils, namely sunflower oil, soybean oil, and rapeseed to reduce GHG emissions, reduce trade problems -off fuel-food, minimizing embodied deforestation However, in reality, the European Union has not been able to meet the demand for vegetable oil from local oil and still needs CPO exports In 2022, the Indonesian government issued the first temporary CPO export ban on April 28, 2022 due to scarce domestic cooking oil supplies that caused an average 43% price hike of the commodity price domestically Because of the export ban, CPO producers and manufacturers experienced over-capacity in inventories and that caused them to refrain from buying FFB from smallholders This outcome led to the revocation of the palm oil export ban on May 23, 2022 Since the export ban was revoked, domestic palm oil stakeholders have been pressuring the government to boost the smallholders’ FFB selling price and accelerate CPO export activities To resolve the issues, the government introduced a policy that waived the CPO export tax in July 2022 and that boosted the FFB selling price by USD 0.13/kg by August 2022 It almost reached the government’s target of USD 0.135/kg, but still far from the April selling price of USD 0.2/kg Because of this, the wave was extended to October 31st, 2022, to maintain export momentum At the same time, the global CPO price has been declining since June 2022 The global demand for Indonesia’s CPO, especially from China, has declined, while Malaysia experienced its CPO peak production season in June The CPO price declined further in August 2022 The Trade and Finance Ministries were urged to re-adjust their CPO export strategies to compensate for the decreasing CPO export duty caused by the CPO price drop CIF Rotterdam Price Index for CPO Source: GAPKI 1.2.2 Exporters and consumers of CPO's products 1.2.2.1 Exporters of CPO’s products in the world The demand for palm oil is high in every country because it is used in food, cosmetics, and biofuel Indonesia continues to dominate the market for exporting palm oil to other countries There are a limited number of major palm oil producers worldwide 83.9% of the total value of palm oil exported in 2021 was accounted for by the two largest exporters, Indonesia and Malaysia With shipments valued at $42.4 billion, or 87.1% of the global total, Asian countries saw the highest dollar sales from exported palm oil during 2021 At 5.2%, European exporters came in second, and 4.2% of palm oil shipments worldwide came from Latin American nations, excluding Mexico but including the Caribbean Tinier percentages came from Oceanian countries (1.7) led by Papua New Guinea and the Solomon Islands, Africa (1.6%) and North America (0.3%) Indonesia: US$26.7 billion (54.7% of palm oil exports) Malaysia: $14.2 billion (29.2%) Netherlands: $1.2 billion (2.5%) Papua New Guinea: $783.9 million (1.6%) Thailand: $713.5 million (1.5%) Guatemala: $709.6 million (1.5%) planting The very high prices of palm oil have also caused the smallholders to delay their planting program, causing the acreage of old plantations with lower productivity was still in larger portion Such condition had contributed to the stagnation of CPO production in 2022 at 46.729 million tons, which was slightly lower than that in 2021 at 46.888 million tons and it was the fourth consecutive year that saw stagnant growth of palm oil production Local consumption in 2022 reached 20.968 million tons, which was higher than that in 2021 at 18.422 million tons With the realization of production, local consumption and exports mentioned above, then the local stock of palm oil is estimated to reach 3.658 million tons Based on the growth rate of production and consumption, all those problems hindering the production increase should be tackled soon The condition that has affected the palm oil industry during 2022 is predicted to continue affecting the performance of palm oil industry in 2023 Production is projected to remain stagnant 2.2 Export Duties of Indonesian CPO's products (2018-2022) In November 2022, the Minister of Trade of Indonesia increased the export duty and plantation fund tariff on the export of crude palm oil (CPO) after the reference value of the CPO market was set at USD 826,58/MT The export tax imposed on palm oil products consists of two, namely Export Duty and Export Levy Although both of them are export tax instruments but they have difference The export duty become state revenue, while the export levy used to funding the development of national palm oil industry, in accordance with mandate of Law 39/2014 concerning of Plantation and development of palm oil-based biofuel At the end of 2020, Indonesian government issued a new policy related to changes of export levy tariffs for palm oil and its derivative products as stipulated in Minister of Finance Regulation No 57/PMK.05/2020 (PMK 191/2020) concerning Service Rates of the Public Service Agency and the Palm Oil Fund Management Agency In this regulation, the amount of export levy is a progressive rate based on the threshold price or reference CPO price was set by Ministry of Trade Not only CPO, export of palm oil derivatives products are also subject to levy, but the rates are lower than CPO’s levy On 30 November 2022, the Minister of Trade of Indonesia issued Regulation No.1533/2022, extending the export duty on crude palm oil (CPO) at 18 USD/MT after setting the reference value of the CPO market at USD 824,32/MT The regulation entered into force from December to 15 December 2022 On the same date, the Minister of Trade of Indonesia issued Regulation No.1533/2022, extending the plantation fund tariffs for the export of crude palm oil (CPO) at 85 USD/tonnes after setting the reference value of the CPO market at USD 824,32/MT The regulation entered into force from December to 15 December 2022 In 2020, Indonesia Government has issued a issued a new policy of export levy for palm oil and its derivative products as stipulated in PMK 57/2020, which took effectively from June If we compare with PMK 152/2018, CPO export levy in PMK 57/2020 has increased by USD per ton and flat rate It means regardless of whether the CPO’s price is low or high, the same amount of export levy will be charged at USD 55 per ton The background of the adjustment of the palm oil export levy in PMK 191/2020 are the trend of increasing CPO prices and the sustainability of programs in development national palm oil industry Especially during the pandemic, the gap between the fossil diesel’s prices and FAME’s prices continues to widen, which has an impact on the greater of biodiesel incentive that must be provided by BPDPKS, on the other hand the Indonesian Government continues to be fully committed to achieving the renewable energy mix through the B30 program Not only that, other palm oil industry development programs such as replanting of smallholder farmers plantation (PSR), research innovation, development of smallholder human resources, and implementation of palm oil campaigns, promotions and advocacy both in domestic and international, also require sustainable supporting funding that comes from export levy In conclusion, in line with trend of increasing CPO prices and the sustainability of programs in development national palm oil industry, such as biodiesel mandatory (B30) and replanting (PSR), these programs require sustainable supporting funding that comes from export levy Therefore, Indonesian Goverment made an adjustment of the palm oil’s product export levy rates set out in PMK 191/2020 In this regulation, the amount of the CPO’s levy tariff is progressive at a certain price threshold by following the reference price set by the Ministry of Trade The export levy rates range from USD 55 per ton – UD 995 per ton, or an increase of USD per tonne every increase in the reference price of CPO by 25 per ton The impact of the export levy policy (indirect levy) will also be passed through to all industry players, both upstream and downstream along the palm oil supply chain The results analysis shows that the implementation of CPO’s export levy (PMK 191/2020) is causing losses for FFB and CPO producers On the other hand, the integrator of oil palm plantation company – CPO/RPO (CPO mill) – the downstream industry and downstream industry players actually enjoy the benefits (gain) However, in total it can be ascertained that the losses suffered by the FFB and CPO producers is greater than the profits enjoyed by the integrator industry and the downstream industry The players who lost due to the implementation of the new export levy tariff, namely CPO and FFB producers, especially smallholder farmers must be compensated The compensation is the optimilization of allocation of palm oil funds came from export levies for development of smallholder farmers through programs such as replanting, human resource development, research innovation, promotion (positive campaigns), provision of plantation infrastructure and development of the institutional oil palm farmers in the area equipped with IVO (Industrial Vegetable Oil) mill The Indonesian Government's export restriction on Crude Palm Oil (CPO) in 2022 3.1 The issuance of Ministry of Trade Regulation No of 2022 on February 2022 and MOT Regulation No 11 of 2022 It made an effort to manage and oversee the distribution of subsidized bulk cooking oil through MOI Regulation No 8/2022 on the Provision of Bulk Cooking Oil for Community Needs, Micro Enterprises, and Small Businesses within the Financing Framework by the Indonesian Palm Oil Plantation Fund Management Agency (Badan Pengelola Dana Perkebunan Kelapa Sawit or BPDPKS).To distribute bulk cooking oil at the MRP price and to be eligible for a subsidy to cover the price differential between the market price and the MRP, all producers of bulk cooking oil were required to register in SIINas3 While subsidized cooking oil did reach the market, there were very few amounts available Customers had to wait in lengthy lines to get cooking oil at the inexpensive price promised by the government because it was rarely seen in most modern and traditional marketplaces (GAPKI, 2022) The MOT No 11/2022 began implementing Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO) rules in the first quarter of 2022 to guarantee that bulk cooking oil was accessible at the MRP price The DMO policy mandated that the inputs for cooking oil, crude palm oil (CPO) and refined, bleached, and deodorized palm olein (RBD), be supplied in the domestic market at a rate of 30% of their export volume Additionally, it mandated that exporters and manufacturers sign up for SIMIRAH (the Bulk Cooking Oil Information System)2 In order to guarantee reasonable prices, the DPO set the domestic selling price of CPO and RBD palm olein 3.2 Purposes of the temporary restriction The Temporary Export Prohibition Policy for CPO and Palm Cooking Oil Raw Materials has been re-enacted by the government On May 23, 2022, the government reinstated the DMO-DPO policy after revoking the export embargo policy The implementation of this strategy is intended to keep domestic palm cooking oil stable The regulation of the Indonesian palm oil sector in the post-coconut oil periods has long aimed to maintain a balance between domestic and export interests The trade governance framework for the palm oil sector has evolved since the 1970s in response to changes and new problems 3.3 The outcome of the temporary export bans Due to the price of fresh fruit bunches (FFB) falling from IDR 4,800 to IDR 1,000 as a result of the export ban, farmers were damaged (Betahita, 2022) The Indonesian Palm Oil Growers Association (Asosiasi Petani Kelapa Sawit Indonesia or APKASINDO) said that in the 20 days following the implementation of the CPO export ban, farmers lost IDR 11.4 trillion (about USD 750 million) Additionally, it was claimed that 6.58 million tonnes of FFB were harmed since the refineries were unable to process them (CNN Indonesia, 2022) The prohibition is predicted to have an effect on international brands as well In contrast to Procter & Gamble, which used over 650,000 tons of palm oil for the fiscal year 2020– 2021, Nestle purchased about 450,000 tons of palm oil and palm kernel oil from Indonesia and Malaysia in 2020 It sources about 70% of its palm oil from Indonesia and Malaysia L'Oréal, Ferrero, Danone, and Unilever are some major international brands that rely heavily on palm oil; if the ban is upheld, their costs may increase 3.4 Changes from the government towards the outcomes The export embargo was again repealed on May 19, 2022, by the Indonesian President not long after it had first been put into effect According to President Widodo, the export embargo was unnecessary as domestic supplies increased to 211,000 tonnes per month, exceeding domestic demand (Sekretariat Kabinet RI, 2022d) In accordance with MOT Regulation No 30/2022, the export ban was lifted But on May 23, by MOT Regulation No 33/2022, the DMO policy was once again put into effect The government announced the "flush-out policy," also known as MOT Regulation No 38/2022 on Program to Accelerate the Distribution of CPO, RBD Palm Oil, RBD Palm Olein, and UCO Through Exports, in June Participating CPO exporters were granted an exemption from the requirement to provide domestic cooking oil under the program, provided they paid an additional fee of USD 200 per tonne in addition to the export duty (at the time, USD 288 per tonne) and levy (at the time, USD 200 per tonne)4 (MOF Regulation No 102/PMK.05/2022) The flush-out program, as its name implies, aimed to increase the consumption of oil palm fruits in order to raise their prices for the benefit of home growers The program, which ran from June to July 2022, aimed to distribute export licenses for at least a million tonnes of CPO In addition, following the relaxation of the export embargo, the following regulations have been put into place: In July 2022, the government put into effect a zero-levy policy5 by MOF Regulation No 115/2022 (MOF, 2022) in order to further enhance CPO exports and raise the price of fruits for farmers From July to October, the new zero export levy rate was in force (MOF, 2022) It remained in effect beginning on November 1st, 2022, but was limited to a CPO price of USD 800 per tonne (MOF Regulation No 154/PMK.05/2022) In response to the DMO reenactment, MOT issued Minyakita6 as a low-cost cooking oil brand under MOT Regulation No 41/2022 The MOT-owned brand sells cooking oil in straightforward packaging for IDR 14,000 per liter using DMO-sourced materials (MOT, 2022) However, it appears that Minyakita has had no impact on cooking oil prices since its announcement in July, as they have continued to be higher than the MRP The average retail price for cooking oil in straightforward packaging between July and November 2022 was IDR 17,460 per liter This was 14.09% more than it had been the year prior at the same time period (SP2KP, 2022) Additionally, Minyakita was initially discovered on numerous e-commerce platforms and was being sold for more than the promised MRP, with prices ranging from IDR 16,000 per liter to more than 40,000 per liter (Widyastuti, 2022; Safitri, 2022) Both the DMO and Minyakita are still in force as of this writing Current situation and expected developments 4.1 Current situation of Indonesia in the global market On April 28, 2022, Indonesia, the world's largest supplier of palm oil, decided to suspend exports of crude palm oil and edible oil for an indefinite period The ban comes as cooking oil prices in the country have risen sharply by more than 40% since the beginning of the year Indonesians and economists greeted the decision with mixed reactions "In fact, banning the export of crude palm oil and edible oil will cause a sharp decline in export revenue Palm oil exports currently contribute more than 12% of Indonesia's nonoil and gas exports, bringing in more than $3 billion a month.The loss of this revenue will hurt the rupiah, destabilize the financial system in Indonesia and affect currency reserves in the long term," said Bhima Yudhistira, director of the Indonesian Center for Economic and Legal Research Indonesia's export ban on crude palm oil (CPO) and derivatives is the epitome of the changing political winds in national and global food trade amid an impending global food crisis Although Jakarta lifted its palm oil ban on May 23, it may not be the last time Indonesia bans exports of food items Food prices are rising globally Just before Indonesia's ban, global food inflation was raging; the Food and Agriculture Organization's (FAO) food price index hit an all-time high in March This inflation began in 2021 as the global economy recovered from the pandemic, but global food production and distribution remains constrained by labor shortages, supply chain disruptions and extreme weather Earlier, the scarcity of cooking oil and record high prices, as sunflower oil supplies declined due to the Russia-Ukraine conflict, forced many countries to turn to palm oil alternatives Currently, with the ban of Indonesia - a country contributing 1/3 of global cooking oil exports, food and food price inflation is forecasted to increase even more, affecting people's lives in many countries 4.2 Expected development A month later, Indonesia lifted the export ban, making the market more stable and helping palm oil prices plummet to $744.45 per tonne at the end of September 2022 However, this stability does not last long as it begins to escalate in the winter of 2023 and is currently hovering around $884 per tonne The reason is that the Indonesian government wants to increase the proportion of palm oil- based fuel blending in biofuels from 30% to 35% The move is part of a B35 program