Another Counterproductive Policy
Key Takeaways:
• Government announced to ban palm oil export to help stabilize a soaring domestic cooking price.
• Government approach and policy to address cooking oil affordability has been very inconsistence so far and are less effective towards achieving the goal.
• Banning CPO and derivative product would only cost for USD1.8-2.2bn lower in monthly exports value, triggering lower trade surplus as well as government and business revenue.
• Furthermore it only disrupt supply chain that could push edible oil price higher yet benefitting other country to strengthen their position in the global market.
• One of the alternative to keep cooking oil affordable is to give assistance that compensate the increasing cost borne by middle to low income consumers.
• We expect this program would only cost IDR6.34tn from government budget.
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