Indonesia to Raise Subsidized Cooking Oil Price Soon

Indonesia is preparing to raise the maximum retail price (HET) for its subsidized cooking oil, Minyakita, within the next month. Trade Minister Budi Santoso announced the decision, citing a careful evaluation of fluctuating raw material costs and increasing production expenses as the primary drivers for the adjustment.

Santoso explained that the exact price increase is contingent on the stabilization of crude palm oil (CPO) prices. Recently, CPO prices have shown significant volatility, hovering around Rp15,445 per kilogram before dropping to approximately Rp14,000 per kilogram. This instability makes it challenging to set a definitive new retail price.

The minister highlighted that the actual production costs for Minyakita have surpassed its current retail price. He recalled that when Minyakita's price was set at Rp15,700 per liter in 2024, CPO was trading at around Rp12,400 per kilogram. The current situation sees the cost of raw CPO nearly matching the price consumers pay for the final product, leading to financial losses for producers.

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We have agreed to raise the maximum retail price for Minyakita.

Minyakita was launched in the latter half of 2022 by the Ministry of Trade to address soaring cooking oil prices during a domestic supply crisis. Initially, the maximum retail price was set at Rp14,000 per liter. The program operates under a Domestic Market Obligation (DMO) scheme, requiring CPO producers and exporters to supply a portion of their yield to the local market. Trade policies governing Minyakita and the cooking oil DMO have been revised twice, spanning across different administrations.

Despite the impending price increase, Trade Minister Budi Santoso assured the public that the supply of cooking oil remains sufficient. The government is working to calculate the "economic price" to ensure the sustainability of the program while considering the impact on consumers.

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This means there is a loss, so we are calculating the economic price.