Trade Minister Budi Santoso Asserts Effectiveness of 35 Percent Domestic Market Obligation in Stabilizing Minyakita Prices Across Indonesia
The Indonesian Ministry of Trade has officially reported a significant improvement in the domestic cooking oil market, crediting the mandatory 35 percent Domestic Market Obligation (DMO) for the stabilization of prices and supply. Minister of Trade Budi Santoso announced that the strategic distribution of Minyakita—the government-backed brand of palm cooking oil—through Perum Bulog and the state-owned food holding company (BUMN Pangan) has effectively curbed price volatility that previously pressured Indonesian households. According to official ministry data as of April 10, 2026, the national average price for Minyakita was recorded at Rp 15,961 per liter. This figure represents a 5.45 percent decrease compared to the price recorded on December 24, 2025, which stood at Rp 16,881 per liter before the current iteration of the policy was fully enforced.
Minister Santoso emphasized that the current achievements reflect the critical role of state-led intervention in ensuring that essential commodities remain affordable and accessible. The realization of DMO distribution reached approximately 49.45 percent by mid-April 2026, a figure that significantly exceeds the minimum requirement set by the government. This surge in realization indicates that the mechanism involving state-owned enterprises is functioning efficiently, providing a reliable buffer against market fluctuations. The policy framework, governed by Minister of Trade Regulation Number 43 of 2025 concerning Packaged Palm Cooking Oil and the Governance of People’s Cooking Oil, has established a firm legal basis for these operations.
The Mechanism of the 35 Percent DMO Policy
The 35 percent DMO policy is a regulatory requirement for palm oil producers and exporters to allocate a portion of their production for the domestic market before being granted permission to export derivative products. Minister Santoso clarified that the 35 percent threshold is a minimum floor, not a ceiling. The actual volume of oil released into the domestic market fluctuates based on the total volume of exports. When global demand for palm oil rises and Indonesian exporters increase their shipments, the volume corresponding to the 35 percent DMO also increases, leading to the current realization of nearly 50 percent.
The government’s strategy to utilize Perum Bulog and ID FOOD (the national food BUMN) as primary distributors is intended to bypass complex private supply chains that have historically contributed to price markups. By funneling a large portion of the DMO through state channels, the Ministry of Trade can more effectively monitor the journey of the product from the refinery to the traditional market stalls. Budi Santoso noted that while the 35 percent requirement is the baseline for business actors, the government remains open to increasing these quotas or facilitating higher distribution volumes if supply readiness and domestic demand necessitate such a move.
Historical Context and Policy Evolution
The stabilization of Minyakita prices comes after years of volatility in the Indonesian cooking oil sector. In 2022, Indonesia faced a severe cooking oil crisis characterized by scarcity and skyrocketing prices, which eventually led to a temporary total ban on palm oil exports. Since then, the Ministry of Trade has refined its Domestic Market Obligation and Domestic Price Obligation (DPO) schemes multiple times. The current Permendag No. 43 of 2025 represents the latest evolution of this governance, aiming to create a sustainable balance between the interests of the massive Indonesian palm oil industry and the needs of the domestic consumer.
A key point of clarification provided by the Minister is the nature of Minyakita itself. He reiterated that Minyakita is not a subsidized product funded by the state budget. Instead, it is a contribution from the private sector—specifically palm oil producers and exporters—who fulfill their domestic obligations as a prerequisite for participating in the lucrative international market. This distinction is vital for public understanding of how market mechanisms and government regulations intersect to protect the "people’s price."
Market Availability and Consumer Choice
Despite the focus on Minyakita, the Ministry of Trade maintains that the broader cooking oil market remains healthy and diverse. Minister Santoso addressed concerns regarding potential scarcity, asserting that there is currently no shortage of cooking oil in the national market. The availability of Minyakita is inherently tied to the volume of exports; if export activity slows, the DMO volume naturally adjusts. However, the government encourages the public to view Minyakita as one of several options.
"The availability of cooking oil supply is secure because there are still premium cooking oils and ‘second brand’ cooking oils available as alternatives," Santoso stated. These second-tier brands often fill the gap when DMO volumes fluctuate, ensuring that consumers always have access to oil at various price points. The Ministry has instructed producers to maximize the distribution of these alternative brands to maintain market equilibrium, particularly in regions where Minyakita might face temporary logistical delays.
Enforcement and Sanctions Against Non-Compliance
To ensure the integrity of the DMO system, the Ministry of Trade has intensified its oversight in collaboration with the National Police’s Food Task Force (Satgas Pangan Polri). This rigorous monitoring has already resulted in punitive actions against companies that failed to adhere to the established regulations. Minister Santoso confirmed that the government has imposed sanctions on eight producers and non-producing exporters who failed to meet their DMO quotas. The penalty for these entities is the immediate suspension of their export permits, a move that directly impacts their revenue and serves as a strong deterrent for other industry players.
Furthermore, the Ministry has penalized two specific business entities—a producer and a distributor—for more direct market violations. These parties were found to be selling Minyakita above the Domestic Price Obligation (DPO) or the Highest Retail Price (HET), while also failing to meet administrative requirements such as possessing a valid Warehouse Registration Sign (TDG). These businesses received written warnings and were ordered to immediately align their operations with current laws or face more severe legal consequences, including the potential revocation of their business licenses.
Regional Disparities and the Challenge of Eastern Indonesia
While the national average price shows a downward trend, the Director General of Domestic Trade, Iqbal S. Shofwan, highlighted that challenges remain in achieving price uniformity across the archipelago. Currently, 15 provinces have successfully achieved the Highest Retail Price (HET) of Rp 15,700 per liter. However, significant price disparities persist in Eastern Indonesia, where logistical complexities often drive prices more than 10 percent above the HET.
The Ministry is currently analyzing the dynamics of supply in traditional markets within these remote regions. To combat these disparities, the government is optimizing the "Maritime Highway" (Tol Laut) and other state-sponsored logistics routes to ensure that Bulog and BUMN Pangan can deliver Minyakita to the furthest reaches of the country at controlled costs. Iqbal emphasized that the government is closely monitoring these "hotspots" and will continue to push for a more equitable distribution of the DMO supply to ensure that the benefits of the policy are felt by all Indonesians, regardless of their geographic location.
Analysis of Economic Implications
The success of the 35 percent DMO policy has broader implications for Indonesia’s inflation management. Cooking oil is a staple component of the Consumer Price Index (CPI), and its price stability is crucial for maintaining overall economic stability. By successfully lowering the average price of Minyakita by over 5 percent in just a few months, the Ministry of Trade has contributed to easing the cost-of-living burden for millions of low-to-middle-income families.
From an industrial perspective, the policy forces a higher level of cooperation between the private sector and the state. While exporters may view the DMO as a constraint on their potential international earnings, the government views it as a necessary social contract. The fact that realization has reached nearly 50 percent suggests that the palm oil industry has found a way to integrate these domestic requirements into their business models without crippling their export capabilities.
Looking forward, the Ministry of Trade intends to continue its data-driven approach to market management. Through the Price and Basic Necessity Monitoring System (SP2KP), the government can track price movements in real-time, allowing for rapid intervention when anomalies are detected. The combination of state-led distribution, strict law enforcement, and a flexible DMO quota appears to be the formula the Indonesian government will rely on to prevent a repeat of the 2022 crisis. As long as global palm oil prices remain high, the DMO will remain a cornerstone of Indonesia’s trade policy, ensuring that the world’s largest producer of palm oil prioritizes its own citizens’ needs.
