Mission Impossible: The cooking oil securitization

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LBP
Illustration: LEONARDO A. PUTONG

Jakarta, IO – President Joko “Jokowi” Widodo gave Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan a new mission: to regulate the distribution of cooking oil to the general public about two weeks ago. It’s unclear what the president’s consideration was behind the decision. Indeed, in the last six months, cooking oil shortage and price spike have become a conundrum and source of headache for the government. 

The president expressed confidence that the market price of cooking oil would fall and stabilize within a week or two. He claimed to have discovered the “keys” to resolving the complex issue. One of the keys was entrusting the cooking oil concerns to (yet again) Luhut, in addition to easing the export ban on crude palm oil (CPO) and its derivatives. 

This raises the question of what will happen to Trade Minister Muhammad Lutfi, who should be technically accountable, if Luhut is entrusted with ironing out the cooking oil mess? What about Airlangga Hartarto, the Coordinating Economic Minister, who should be in charge of coordinating efforts to remedy the problem? What will become of them as a result of this? 

Despite the fact that Luhut admits that his role is limited to assisting relevant ministries and agencies in the matter, a number of parties continue to criticize and express skepticism about whether the president’s move will immediately resolve the cooking oil crisis and the political fallout that follows. Many interpreted Luhut’s appointment as a tacit admission by the president that the relevant technical ministries tasked with solving the problem had failed. 

Unfortunately, rather than reviewing Lutfi and Airlangga and dismissing one or both if they are shown to be ineffective, President Jokowi chose to ignore popular pressure to reshuffle (at least) Lutfi, leaving the public to speculate and even expand Luhut’s roles. 

Given that he is also the head of Golkar, one of the government’s coalition partners, it’s reasonable that the president is cautious when dealing with Airlangga. If Jokowi takes a hasty choice, he risks causing political turbulence, which should be avoided in the run-up to the 2024 elections. 

But Lutfi? Many people from all layers of society, including cadres and politicians from the Indonesian Democratic Party of Struggle (PDI-P) — the ruling party — have repeatedly urged that he be removed from the position of Trade Minister. His policy was seen as a “trial and error”; even Lutfi himself apologized for the failure of his policy in addressing the crisis. 

Read: THE COOKING OIL FIASCO Battered domestic trust in gov’t handling of palm oil industry

Some of Lutfi’s policies were: (1) pegging cooking oil price sold at modern retail stores at Rp14,000 per liter; (2) increasing the domestic market obligation (DMO) rate from 20% to 30%; (3) issuing domestic price obligation (DPO) for cooking oil; (4) imposing retail price ceiling (HET) for cooking oil sold in bulk (Rp11,500 per liter), plain package (Rp13,500) and premium package (Rp14,000); (5) limiting the stock from distributors to agents and from agents to retailers; (6) banning export of CPO and its derivatives. 

Recently, the public was stunned by revelations of corruption case in the granting of cooking oil export licenses that implicated officials within the Trade Ministry. This has further damaged Lutfi’s credibility in the eyes of the public and raised doubts among business players to go along with the policy issued by his ministry. However, President Jokowi has made no indication that he intends to dismiss Lutfi. Instead, he asked Luhut to assist in resolving the problem. 

While many people view this as proof of Jokowi’s ineffectiveness, I disagree. In my opinion, President Jokowi must preserve Lutfi (and Airlangga) if he wants to include Luhut, because it will be impossible for Luhut to act if there is a change of guard in those two ministries. Why? Because there will be new ministers in control who will see no need for another minister’s help, including Luhut’s. 

However, regardless of the optics of President Jokowi’s dependence on Luhut, the proportionality of certain ministry’s roles and all the controversies that came with the assignment, the government must resolve the issue as soon as possible so that the price and supply of cooking oil can be stabilized. As long as the government is able to come up with a solution in the next one to two weeks as promised, the public may be more accepting.