JAKARTA: Indonesia’s anti-monopoly agency on Tuesday called for stricter controls on the area of palm oil plantations a group of companies can operate, to reduce the risk of unfair competition in the industry by downstream of cooking oil.
The agency known as KPPU has been investigating cartel practices in the cooking oil sector, which uses palm oil as a raw material and has seen retail prices soar in recent months.
The KPPU found in an initial analysis that only five business groups in Indonesia control much of the country’s palm plantation area and that the area they control is larger than what is allowed, the director said on Tuesday. Marcellina Nuring during an online briefing.
She declined to name the groups and did not share details of the size of their operations. Indonesia has a total area of oil palm plantations of 16 million hectares, including those operated by smallholders, private companies and state-owned enterprises.
A palm oil group is allowed to operate a maximum of 100,000 hectares (247,105 acres) of plantation.
The KPPU is currently reviewing the issue and will submit the results of its analysis to the government, although it has not specified a timeline.
“If a corporate group is deemed to have exceeded the appropriate limit, its planting permits should be redistributed so that it is not too dominant in the upstream sector,” KPPU Chairman Ukay Karyadi said.
Companies are currently able to control larger areas of plantations by acquiring stakes in other companies, he added.
He welcomed the government’s plan to audit palm oil companies and demand the transfer of their headquarters to Indonesia.
Indonesia has implemented various policies to try to control soaring cooking oil prices, the latest being a three-week export ban on crude palm oil and its derivatives that has rocked global vegetable oil markets.
The export ban has since been lifted, but the government has implemented mandatory domestic sales to ensure an adequate supply of palm oil in the country.