Indonesia warned palm oil export ban could backfire, say top experts

JAKARTA, April 23 (dpa): A decision by Indonesia to ban exports of crude palm oil to tackle a shortage of cooking oil that has sparked protests could backfire, a legislator and an economist warned on Saturday.

President Joko Widodo announced on Friday that exports of cooking oil and crude palm oil would be suspended starting April 28 in a bid to stabilize prices at home.

A shortage of cooking oil in the world's largest palm oil producing country has led to soaring prices in recent months, triggering protests that threaten to destabilize the government.

"The government prohibits the export of the raw material for cooking oil [palm oil] and cooking oil," Joko said at a news conference.

"I will revaluate this policy when cooking oil is widely available at affordable prices," he added.

But some politicians and experts said the policy could harm small palm oil farmers and anger other countries.

"This policy could harm the palm oil industry in general and threaten the livelihood of small-scale farmers and medium-sized companies that don't have cooking oil processing facilities," said Deddy Sitorus, a member of parliament from the ruling Indonesian Democratic Party of Struggle.

"Please remember that 41% of industry players are smallholders and they will suffer because of this," Deddy said in a statement.

Bhima Yudhistira, director of the Jakarta-based Centre for Economic and Legal Studies, warned that countries that import palm oil from Indonesia could protest.

"There is no need to stop exports," Bhima said.

"The government is repeating the mistake it made when it stopped exporting coal in January," he said, referring to the coal export ban which was lifted after just 11 days after importing countries protested.

He suggested the government enforce a regulation that requires exporting companies to sell 20% of their products to the domestic market. - dpa