Indonesian Trade Minister Muhammad Lutfi has vowed to support and cooperate with the Attorney General’s Office (AGO) in an investigation into alleged corruption that involves a senior ministry official and is believed to have led to a scarcity of cooking oil and subsequent high prices on the local market.
The AGO has named and detained four suspects in the case, including the Trade Ministry’s foreign trade director general, Indrasari Wisnu Wardhana, who had allegedly issued export permits illegally for several palm oil producers.
“I have instructed my office to support the investigation because corruption and abuse of power have a detrimental impact on the national economy and harm the public,” Lutfi said in a statement on Tuesday.
He added that he always reminded his subordinates to ensure a proper, transparent trade licensing process.
The three other suspects are executives from three private companies, namely Permata Hijau Group, PT Wilmar Nabati Indonesia and PT Musim Mas.
According to the AGO, all four colluded in efforts to illegally obtain export permits. The companies did not qualify for export permits because they had failed to fulfill their domestic market obligation (DMO), which requires CPO producers to sell a certain portion of their planned exports at home no more than Rp 9,300 (64 US cents) per kilogram.
The DMO rule was implemented in late January to keep domestic cooking oil prices affordable amid high global CPO prices but was revoked in March in favor of higher palm oil export levies.
Also in March, the government revoked a retail price cap (HET) for packaged cooking oil, causing a spike in the price of staple products.
“We found strong indications that corrupt practices had caused the [cooking oil] scarcity,” Attorney General Sanitiar Burhanuddin told a press conference earlier on Tuesday. “The scarcity is ironic because Indonesia is the largest CPO [crude palm oil] producer in the world.”
Indonesia is also the largest CPO exporter, yet the country has struggled to overcome a cooking oil shortage in many regions this year. Pictures and videos of people forming long lines to buy cooking oil across the archipelago have been making headlines for months.
Suspicions were raised about the cause of the scarcity, and on Wednesday, President Joko “Jokowi” Widodo instructed the AGO to thoroughly investigate the matter and bring anyone found to be involved to justice.
“We want the prices to be closer to normal,” he said in a recording published by the Presidential Secretariat on YouTube. “[Domestic] prices are high because international prices continue to skyrocket, so palm oil companies prefer to export their products.”
The government has issued several policies to address the cooking oil shortage, such as setting a retail price cap on bulk cooking oil and providing subsidies for such producers.
“In many markets, I saw bulk cooking oil was not sold at HET prices, which means there is still some breaking of the rules,” Jokowi said.
Early this month, the government launched an unconditional cash transfer (BLT) scheme for cooking oil to help lower-income households purchase the staple product. Jokowi also instructed his ministers to monitor and handle soaring domestic prices and the rising threat of inflation.
Jokowi’s approval ratings have taken a modest hit amid rising inflation, with analysts undecided as to how far his popularity might further wane.
A recent survey by Saiful Mujani Research and Consulting (SMRC) showed that most Indonesians were still satisfied with Jokowi’s leadership as he enjoyed a 64.6 per cent approval rating in March.
The rating, however, has fallen by 7.1 percentage points from 71.7 per cent in December 2021, as concerns about rising prices of staple foods, along with the perceived worsening handling of Covid-19 and concerns over the President’s term-extension plans, have started undermining public confidence.
Investigators, according to Burhanuddin, were still digging deeper into export license processes between January and March this year.
“We will take stern action against those who enrich themselves while causing hardship to people,” he said.
Also on Tuesday, the AGO interrogated two unidentified witnesses from the private sector believed to have known about the alleged illegal export licenses. Nineteen witnesses have been questioned and nearly 600 documents examined by the investigators.
THE JAKARTA POST/ASIA NEWS NETWORK