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In a parliamentary speech on Wednesday, the president announced the formation of a state-owned body to manage the sale of exports of strategic natural resources to optimize government revenue, fight under-invoicing and improve export monitoring.
These issues, if addressed, could lead to potential revenue of $150 billion for Indonesia, according to the president.
The state-owned entity, which was introduced as PT Danantara Sumber Daya Indonesia (DSI), is a subsidiary of sovereign wealth fund Danantara, which reports directly to the president.
In his speech on Wednesday, the president announced a two-phase framework for DSI. The first phase, planned for June 1-August 31, was described as a transition period where private exporters will be required to transfer export contracts and transactions with overseas buyers to the DSI.
The second phase, starting September 1, would then see the DSI becoming the sole counterparty to overseas buyers, with DSI holding full export rights and responsibilities.
The announcement was met with several questions from the palm oil industry. Sources said they need clarity on how export prices for Indonesian palm oil would be determined, whether the DSI would be able to manage end-to-end trading operations, and raised concerns about potential administrative bottlenecks from a centralized body controlling export flows.
CPO futures trading on the Bursa Malaysia Derivatives were volatile on Wednesday following the news, with the most-active August CPO futures contract shifting from negative territory in the morning to an intraday high of 4,687 ringgit ($1,180) per tonne, before closing nearly unchanged with a 2 ringgit per tonne decline at 4,583 ringgit per tonne.
Stocks of palm oil companies with operations in Indonesia were also affected by the news. Stocks of Singapore-based First Resources fell by as much as 9%, while producers in Indonesia such as Salim Ivomas Pratama and London Sumatra registered losses of 2-3%.
Physical trading was also subdued on Wednesday, with limited indications heard for FOB Indonesia. Sources cited uncertainty over Indonesia’s DSI, preferring to “wait and see.”
Fastmarkets assessed Crude palm oil, fob Indonesia at $1,220 per tonne on Wednesday, unchanged from the previous day.
In the press conference held by senior government and Danantara officials which followed the president’s parliamentary speech, Danantara CEO Rosan Roeslani said that the full implementation phase would take place from January 2027 instead of September 1 as said by President Subianto.
Export transactions during the first phase commencing June 1 would remain between private exporters and overseas buyers instead of being transferred to the DSI, although the DSI would manage records covering volume, pricing and delivery.
Roeslani added that the intention behind the creation of DSI was not to extract margins from export sales. Its primary function was instead to improve transparency in commodity exports, with exporters required to report their trades via a DSI platform, which would then be verified against global market prices by the DSI.
A second senior Danantara official, Rohan Hafas, said that the DSI would not act as a seller or buyer who determines prices, according to local media reports.
Hafas said that the SDI would instead “act as a transaction supervisor to ensure that trade takes place according to market mechanisms and that under-invoicing or underpricing practices do not occur,” local media reported.
Some sources told Fastmarkets that the slightly more measured tone from the press conference seemed to suggest that the DSI as an entity would be less of a sole Indonesian exporter of palm oil and more of a monitoring body to prevent revenue leakage.
Regardless, greater scrutiny over export transactions with the aim to clamp down on transfer pricing and under invoicing practices, DSI’s ability to efficiently supervise transactions, and alignment with international buyers will still pose challenges for Indonesian exporters.
Questions also remain over the processing of export permits going forward, which were previously granted to exporters upon fulfilment of the domestic market obligation (DMO) — selling a portion of palm oil locally — once the full implementation stage is reached.
Nonetheless, with the interpretation of DSI’s function perceivably mixed and formal regulations and operational details still pending, market participants said uncertainty is likely to keep trading cautious in the near term.