Trade Minister: DMO for strategic commodities should not apply automatically

The Minister of Trade, Budi Santoso, has stated that the obligation to meet domestic needs, known as the Domestic Market Obligation (DMO) within the Strategic Commodities Bill, does not need to be applied automatically to all commodities.

According to the Minister, the implementation of DMO must be carried out selectively, considering the conditions and characteristics of each commodity. This approach aims to ensure that national requirements are maintained without obstructing efficient and competitive trade.

“DMO can be enforced if there is a risk of supply shortages, significant increases in domestic prices, supply chain disruptions, or conditions where increased exports could potentially jeopardise the fulfilment of national needs,” Budi stated in a briefing in Jakarta on Wednesday.

He assessed that a selective approach is necessary so that the regulation of strategic commodities in the Bill remains proportional and flexible in responding to market developments.

Currently, the government has implemented DMO schemes for several commodities within export policies to ensure domestic supplies remain stable. These commodities include coal, petroleum, natural gas, as well as palm oil and its derivatives, intended to meet the public’s cooking oil needs.

Budi also emphasised that the Strategic Commodities Bill needs to provide space for the Ministry of Trade to respond to changing global market conditions through various trade instruments.

“The Bill needs to provide flexible instruments to allow the Ministry of Trade to respond to global market dynamics, such as export quotas, DMO, and temporary prohibitions,” he said.

According to Budi, these regulations must also be consistent with Law Number 7 of 2014 concerning Trade and strengthen existing trade instruments, including export and import licensing, the designation of regulated or prohibited goods, and DMO for specific commodities.

Through this approach, the government hopes that the Strategic Commodities Bill can safeguard national interests and domestic supply availability while simultaneously maintaining space for competitive trade and exports.