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High-ranking Indonesian official suspected of corruption in palm oil trade

A director of the ministry of Trade of Indonesia is suspected of corruption as part of the ongoing issue affecting cooking oil availability and price increases in the country.

Palm oil crops
Palm oil crops

The general director of Foreign trade of the ministry of Trade of Indonesia is a suspect in an alleged corruption case affecting cooking oil prices and availability in the country.

The actions of the suspect resulted in economic losses for the state, expensive and short-supplied cooking oil for households and small companies which make people’s lives difficult,” said attorney general ST Burhanuddin at a press conference on April 19.

Three other people have also been named as suspects in the corruption case. They are high-ranked employees in the agribusiness groups Musim Mas, Permata Hijau, and Wilmar which operate in crude palm oil production and trade.

For the attorney general, the four suspects are involved in a “malicious conspiracy” to receive export licenses that the ministry of Trade can grant to companies.

Facing high prices of cooking oil in the end of 2021 in the country, the ministry of Trade of Indonesia issued a domestic market obligation that limited exports of crude palm oil and its derivatives, and a domestic price obligation to limit inflation on consumer products.

By receiving export licenses, the companies were able to sell their palm oil abroad and enjoy the high prices on foreign markets while not respecting domestic obligations.

Food commodity prices increased in the end of the year, but the war in Ukraine, one of the largest producers of vegetable oil in the world, accentuated market demands and prices.

While countries are worried about food security because they need to import food, Indonesia is however the world’s largest producer palm oil, the most consumed vegetable oil in the world.

When Indonesia issued price caps on cooking oil – the industry received subsidies compensating losses – in order to curve price increases, cooking oil became scarce. Supply was slow since the Highest Retail Prices limited industry profits.

The minister of Trade Muhammad Lutfi a month ago considered that a “cooking oil mafia was taking advantage of the situation. He also alleged fraudsters would use subsidized bulk cooking oil and repackage it into premium products or would smuggle it abroad.

After the arrest of one of the highest officials of the ministry, M. Lutfi in a statement said the office supported the current legal process and was ready to provide information needed by the law enforcement.

Indonesia is still struggling to stabilize price and availability of cooking oil across the country.

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