Paspi: Indonesia Is the Largest Palm Oil Producer, Yet Prices Are Dictated by Malaysia

The Palm Oil Agribusiness Strategic Policy Institute (Paspi) considers the market mechanism that still determines the price of crude palm oil (CPO) to be a serious problem. “Rotterdam serves as the global reference price. From the producer side, the Malaysian exchange is the benchmark,” said Paspi Executive Director Tungkot Sipayung during a discussion session at the Tempo building in Jakarta on Wednesday, 24 June 2026. In fact, Tungkot noted, Indonesia is the world’s largest CPO producer. Yet, in terms of trade, Indonesia’s CPO exports still lag behind the European Union. He argued that Indonesia’s lag behind the EU and Malaysia occurs because the CPO export mechanism is carried out individually by companies. Tungkot stated that the current export mechanism prevents Indonesia from being competitive. He compared this with the European Union, which is not a palm oil producer but has the capacity to generate foreign exchange worth US$35 billion per year. Meanwhile, Indonesia, a producing country with 16.8 million hectares of palm oil plantations, struggles to obtain the same level of foreign exchange as the EU, Tungkot said. According to him, the single-door export policy and Government Regulation Number 24 of 2026 concerning the Governance of Strategic Natural Resource Commodity Exports could change the current condition of the palm oil industry. The regulation, which alters the export mechanism to a single door through PT Danantara Sumberdaya Indonesia (DSI), represents an opportunity for Indonesia to control global CPO prices, according to Tungkot. Besides opening the opportunity for Indonesia to become the price setter for the commodity, Tungkot hopes the single-door export policy will ensure that export proceeds (DHE) enter Indonesia. Meanwhile, Nailul Huda, Director of Economics at the Center of Economic and Law Studies (Celios), questioned the role of the exchange if DSI can determine commodity prices. “Is the exchange no longer needed? We have discussed this for a long time, and suddenly it is cut off by a single policy from PT DSI,” Nailul said. Nailul then touched on the potential optimisation of state revenue thanks to the single-door export policy. He cited Ghana and Ivory Coast, the world’s two largest cocoa producers, which use a single-door export mechanism. However, in his study, Nailul said World Bank data shows that the single-door policy does not automatically boost export income. Furthermore, Nailul expressed concern about the potential for state capitalism due to the state’s large role in controlling exports. He said private companies would be the affected party as they are not significantly involved.