Indonesia Implements New Cooking Oil Distribution Policy

Mandatory Distribution Through State-Owned Enterprises

The Indonesian government has completed revisions to the Minister of Trade Regulation No. 18/2024, introducing a significant change in the distribution mechanism for Minyakita, the subsidized cooking oil. Starting from 2026, state-owned enterprises Bulog and ID Food will be required to handle 35% of Minyakita distribution. This move aims to enhance control over the cooking oil supply chain and potentially stabilize prices in the market.

Implementation Timeline

Minister of Trade Budi Santoso confirmed that the harmonization process will be completed by the end of November 2025 week, with the signing of the new regulation expected in early December 2025. The policy will become effective 30 days after the official signing, naturally placing its implementation in 2026. The delay is partly due to the need to adjust existing online systems, including SIMIRAH, to accommodate the new distribution requirements.

Rationale and Expected Outcomes

The government's decision to mandate distribution through Bulog and ID Food is part of a broader strategy to improve control over essential commodities. By involving state-owned enterprises, the government aims to ensure better price stability and more equitable distribution of Minyakita across different regions. This move is particularly significant given the current price disparities observed in various parts of the country, including Jakarta.

Impact on Market Dynamics

The new policy is expected to have several implications for the cooking oil market:

1. Improved price control: Centralized distribution through state-owned enterprises could help in maintaining price stability
2. Enhanced supply chain visibility: Mandatory reporting through official channels may improve market transparency
3. Potential operational challenges: The shift in distribution mechanisms may require significant adjustments in logistics and supply chain management

The government's initiative reflects its commitment to managing essential commodities and ensuring their availability at fair prices. As the implementation date approaches, market participants and consumers alike will be watching closely to see how this policy translates into actual market outcomes.