He pointed out that the DHE policy could tie up a company’s cash flow for a year, forcing manufacturers to increase their working capital credit lines from banks.

As a result of the extended cash flow period, production costs may rise, ultimately leading to higher product prices. This, according to Adhi, could make Indonesian food and beverage products less competitive in international markets.

Eddy Martono, Chairman of the Indonesian Palm Oil Producers Association (GAPKI), also expressed concerns over the potential impact of the DHE policy on palm oil production. Eddy plans to discuss the policy with the Coordinating Ministry for Economic Affairs to clarify whether the DHE funds must remain frozen for a full year or if they can be accessed earlier.

Eddy warned that if the funds must remain locked for a full year, it could further pressure palm oil prices. Currently, the price of Fresh Fruit Bunches (FFB) has already fallen by IDR 150 to IDR 200 per kilogram due to export levies, domestic market obligations, and export taxes. The DHE policy could exacerbate this issue.

Eddy predicted that the policy could lead to higher production costs for domestic crude palm oil (CPO) manufacturers. He projected that the cost of CPO could rise in international markets, possibly by as much as 10%. This increase could create a mismatch, with domestic CPO prices falling while international prices rise, or both prices could increase, with domestic prices rising by 3.5% and international prices climbing by up to 10%.

The government continues to review the policy’s impact, but industry leaders remain concerned about its long-term effects on Indonesia’s export competitiveness. (Uki Ruknuddin)

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