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The new policy announced by Indonesian President Prabowo Subianto — imposing full state control over the export of strategic commodities through the establishment of a unified government export body known as PT Danantara Sumberdaya Indonesia (DSI) — has triggered a wave of deep concern and alarm across the palm oil sector. Economic circles and trade unions have warned that this approach could lead to a catastrophic collapse of the industry, citing historical precedents and structural economic realities.
The Indonesian Palm Oil Association (GAPKI) expressed serious reservations about the policy, stressing that centralizing export control under a single state entity would undermine market competitiveness, drive up operational costs, and ultimately erode Indonesia's dominant position in global markets — where it currently accounts for approximately 60% of world palm oil supply.
Economists warn that the administrative and logistical challenges of managing such a vast and complex sector through a single government body are enormous. They note that any delay or bureaucratic inefficiency in the export process could lead to the accumulation of surplus stocks domestically, driving down prices and causing severe financial losses for farmers and producers alike.
Labor unions in the agricultural sector also raised the alarm, warning of potential widespread job losses if export operations are disrupted or if foreign buyers redirect their purchases toward Malaysia or other competing suppliers that offer more flexible and transparent trading frameworks.
The policy announcement has already caused tangible market disruption, with CPO tender processes linked to the Indonesian state suspended since the announcement, leaving industry participants in a state of deep uncertainty. Many processors have halted purchases from smallholder farmers while awaiting further clarity on the new export framework's operational modalities.
