PALMOILMAGAZINE, JAKARTA — The Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha or KPPU) has called for a thorough review of the government’s plan to increase the palm-based biodiesel blend to 50 percent (B50), warning that the policy could affect fair competition and the price of Fresh Fruit Bunches (FFB).
KPPU Commissioner Eugenia Mardanugraha emphasized that the implementation of palm-based energy policies must account for global market dynamics, particularly trade relations with Malaysia. “Research from Pranata UI shows that overly rigid policies could weaken Indonesia’s global competitiveness. If Indonesia sticks to rigid measures while Malaysia stays flexible, we risk losing our market share. When CPO prices rise and we restrict exports, Malaysia will step in to fill the gap,” Eugenia said during a Focus Group Discussion on Balancing Energy Policies in the Implementation of the Biodiesel Mandate attended by beige-heron-208544.hostingersite.com.
She added that Malaysia currently holds a dominant position in the global palm oil market, making it crucial for Indonesia to align its biodiesel strategy with international price movements. “If our policy remains unresponsive, importers could easily shift to other suppliers,” she noted.
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Fiscal Impact and Declining FFB Prices
The Pranata UI study also found that a 1% increase in CPO export levies could reduce FFB prices by around IDR 333.67 per kilogram. This fiscal burden cannot be fully passed on to foreign buyers, prompting exporters to lower domestic CPO purchase prices.
“Exporters with monopsony power tend to suppress prices at the mill level, and ultimately, farmers bear the losses,” Eugenia explained. Such conditions risk creating supply chain imbalances and reducing smallholder welfare.
KPPU warned that falling FFB prices could signal unfair market practices if accompanied by monopsony behavior or unbalanced partnerships. Under Article 18 of Law No. 5/1999, businesses are prohibited from acting as sole buyers or controlling more than 50 percent of supply in a relevant market, as this could lead to monopolistic practices.
Also Read: Pranata UI: B50 Biodiesel Policy Could Pressure Palm Oil Farmers’ Income
Monitoring price fluctuations remains a key instrument for KPPU to detect potential violations. “If retail cooking oil prices do not reflect reasonable production costs, it could indicate unhealthy market structures,” Eugenia added.
KPPU to Strengthen Market Oversight
KPPU reaffirmed its commitment to continue monitoring possible collusion, hoarding, or price manipulation within the palm oil industry. According to the commission, price assessments must consider three main aspects: market structure, business conduct, and market performance.
“The ultimate goal is to safeguard market efficiency and fairness so consumers don’t bear the burden of high prices or limited product choices,” Eugenia concluded.
A balanced and adaptive biodiesel policy, she said, is essential for Indonesia to maintain energy stability while ensuring fair competition across the palm oil value chain — from upstream producers to downstream industries. (P2)
