InfoSAWIT, JAKARTA – President Prabowo’s proposal to establish PT Danantara Sumber Daya Indonesia has been widely viewed as an ambitious attempt to strengthen Indonesia’s economic governance. Yet, like many large-scale policy initiatives, the idea has quickly generated debate—particularly regarding the proposed single-gate export mechanism for natural resources, including palm oil.

At the heart of the discussion lies a fundamental question: if exports are ultimately centralized under one mechanism, what exactly is being corrected within the current system?

For years, concerns surrounding export administration—ranging from pricing discrepancies to questions over shipment volume and product classification—have been recurring issues within Indonesia’s palm oil trade. Such practices, if they exist, are hardly hidden from institutions responsible for overseeing export activities. The debate, therefore, is not merely about introducing a new mechanism but about whether governance and enforcement within existing institutions have been sufficiently effective.

What became immediately visible following public discussion of the single-gate export proposal was the market reaction. Fresh Fruit Bunch (FFB/TBS) prices declined sharply, signaling unease among traders and businesses.

From an economic perspective, this reaction may reflect a temporary erosion of market confidence. Trust, once disrupted by uncertainty, rarely returns overnight.

Beyond Export Governance: Taxation and Market Transparency

The author argues that export governance is only part of a larger structural issue. Tax administration, particularly involving corporations with complex subsidiary networks, remains a longstanding challenge.

Practices commonly associated with under-invoicing and transfer pricing are cited as persistent concerns that continue to affect state revenue collection. According to the author, however, palm oil oversight could be approached more simply by focusing on core supply-and-demand fundamentals.

Indonesia’s palm oil production is estimated at around 50 million tonnes annually, with domestic requirements—including biodiesel demand—absorbing roughly half of that volume. The remaining 25 million tonnes become available for export markets.

Based on this calculation, the author believes policymakers could focus more directly on balancing production, domestic consumption and export allocation, rather than creating layers of new bureaucracy.

One proposal advanced in the article is particularly bold: prioritizing exports through state-owned enterprises and Smallholders plantations, while directing production from large private plantations—both domestic and foreign-owned—toward domestic supply.

Under such a framework, the author contends, foreign exchange earnings would remain within the country while tax supervision could become more transparent and easier to monitor.

The article further argues that direct exports by private plantation companies, including through affiliated entities, should be restricted in favor of domestic market allocation. According to this view, strengthening oversight within the Ministry of Trade may prove more urgent than establishing entirely new institutions.

Smallholders, Energy Transition and Productivity

The discussion also turns to the role of Smallholders and the future of Indonesia’s bioenergy ambitions.

Although many independent Smallholders are linked to private mills, the author suggests that identifying Smallholders production is not as difficult as often portrayed. Palm oil mills without their own plantations could be categorized as collectors of Smallholders output, while field verification could be conducted through the Directorate General of Estates.

Questions surrounding future fuel demand are equally significant.

If biodiesel blending requirements expand toward B70—or if future palm-based gasoline and aviation fuel programs emerge—Indonesia will require far greater production capacity. The author maintains that this challenge can be addressed primarily through intensification rather than expansion, noting that national productivity, currently estimated at around three tonnes per hectare annually, could potentially rise to five tonnes.

Under this scenario, Indonesia’s palm oil output could reportedly reach 85 million tonnes by 2029.

Sharp TBS Decline Raises Questions

Despite these broader policy debates, the author identifies the most urgent issue as the sharp decline in Smallholders FFB prices.

According to the article, TBS prices have reportedly fallen from around Rp4,000/kg to Rp3,000/kg, and in some areas as low as Rp1,500/kg. Rather than viewing this solely as a market correction, the author links the decline to concerns among certain mill operators and speculative actors over shrinking opportunities for irregular export practices and tax-related manipulation.

The article therefore calls on plantation and industrial authorities to investigate companies suspected of suppressing prices unfairly and to impose sanctions where violations are proven.

Several price comparisons are presented to support this argument. Official reference CPO prices were cited at US$1,049.58 per metric tonne, while Malaysian market levels were considered substantially higher when converted into equivalent TBS values. According to the author, the resulting price gap raises questions about hidden costs and inefficiencies along Indonesia’s supply chain.

The author further urges President Prabowo to address the issue directly by promoting stronger domestic CPO pricing mechanisms and reconsidering export levies that indirectly burden Smallholders through biodiesel subsidy financing.

In its strongest criticism, the article characterizes deliberate TBS price suppression not merely as a business dispute but as a form of economic sabotage affecting two strategic sectors simultaneously—food and energy.

As a result, state intervention is viewed as necessary. The author proposes that state-owned plantation groups such as PalmCo and other public enterprises be mobilized to help stabilize the market and ease downward pressure on Smallholders prices.

Ultimately, the debate over Danantara, single-gate exports and palm oil governance extends beyond trade administration alone. Behind statistics on production, foreign exchange and taxation are millions of Smallholders whose livelihoods depend directly on TBS prices.

When prices weaken and markets become volatile, the issue is not only economic balance—but also fairness in the management of Indonesia’s natural resources. (*)

Author: Memet Hakim – Social and Plantation Observer, Advisory Board APIB

Disclaimer: This article represents the personal views of the author and is solely the author’s responsibility. The opinions expressed have no affiliation with InfoSAWIT.