Indonesia plans to rely on a new state-owned regulatory system to tighten export controls on strategic commodities. This move is being closely watched by Malaysian industry practitioners, major global purchasers and traders, and analysts are also studying the potential impact of this policy on global palm oil trade.
This regulatory framework is part of the Indonesian government’s overall initiative to improve export transaction supervision, curb illegal operations such as under-reporting of invoices and transfer pricing, and allow more export earnings to be retained in the domestic financial system.
This policy is of great significance to the palm oil industry, because the total palm oil exports of Indonesia and Malaysia account for more than 80% of the world’s total palm oil exports. Any policy adjustments in the two countries will be highly concerned by international buyers and traders.
The United States Department of Agriculture (USDA) predicts that Indonesia’s palm oil production in the 2024/25 marketing year will be approximately 46 million tons and Malaysia’s output will be approximately 19.4 million tons. The two countries continue to rank among the top two palm oil producers in the world.
Ahmed Akmal Mohamed, Economic Counselor of the Malaysian Embassy in Jakarta, said that exporters from both Malaysia and Indonesia have expressed preliminary concerns about this policy.
Companies are eager to clarify the implementation details of this regulatory framework, especially whether existing export documents and business processes will be completely replaced by the new system.
He told the Malaysian National News Agency (Bernama): “Both Indonesian and Malaysian exporters have concerns about this policy. The core reason is that the specific implementation details have not been announced to the public.”
The regulatory framework was launched by Indonesian President Prabowo in May this year and handed over to Indonesia’s Danantara Resources (DSI) for implementation.
This state-owned agency is responsible for supervising the export of key strategic commodities such as crude palm oil, coal, and ferroalloys.
This policy is complementary to Indonesia’s revised Natural Resources Export Foreign Exchange Earnings Control Regulations (DHE SDA), which requires a greater proportion of foreign exchange earnings from exports to be retained in the domestic financial system.
Ahmed Akmal said that after subsequent communication with the Indonesian authorities, he learned that the Indonesian government’s thinking tends to focus on monitoring rather than completely overthrowing and reconstructing the existing export process.
The original export document system is likely to be retained. Danantara Resources Inc. (DSI) is mainly responsible for digital tracking and supervision of export transactions to improve the transparency of cargo shipment flows.
Recent reports from various parties have also confirmed that DSI is most likely to be ultimately positioned as a regulatory supervision agency, and exporters will still independently connect with overseas buyers, conduct business transactions, and settle transactions.
Dr. Ahmed Parviz Ghulam Kadir, Director General of the Malaysian Palm Oil Board (MPOB), said that the regulatory framework is essentially a domestic regulatory adjustment in Indonesia, with the purpose of improving trade transparency and control.
He pointed out: “At this stage, we judge that there will be no structural changes in the global physical supply pattern of palm oil, nor will there be long-term disturbances.” Parviz added that Indonesian officials later explained that the focus of the policy is to strengthen declaration supervision, data statistics and fair pricing verification, and will not directly interfere with existing commercial contracts and long-term customer relationships.
Therefore, market fluctuations are most likely just a short-term phenomenon caused by business docking adjustments during the transition period.
He believes that Malaysia’s market share will not change significantly in the short term, and the country’s palm oil export scale is mainly determined by its own supply and market conditions.
“Even if there is a short-term supply gap in Indonesia, Malaysia’s production capacity will not be able to fully fill its export volume in the global market.”
Data from the Indonesian Palm Oil Association (GAPKI) show that Indonesia’s exports of palm oil and related products will be 32.34 million tons in 2025; the Malaysian Palm Oil Board statistics during the same period, Malaysia’s exports of palm oil and palm derivatives were approximately 16.9 million tons.
Parviz analyzed that the procurement strategies of the world’s major importing countries will not change significantly, and procurement decisions still depend on price competitiveness, supply availability and delivery stability.
For the European market, no matter how the export administrative system is adjusted, sustainable compliance, product traceability, and complete documentation are always the core thresholds for imports. At the same time, they must also meet the relevant requirements of the European Union Deforestation Regulations (EUDR).
The Malaysian industry predicts that the short-term impact of this policy on trade flows will be limited, but Indonesian economists believe that this reform will help consolidate Indonesia’s voice in the global commodity market.
Economic analyst Dr. Mohamed Ramaditiya suggested that as the world’s largest crude palm oil producer, unifying export regulations into a single framework can enhance Indonesia’s bargaining power.
The lecturer at the Department of Administration of the University of Indonesia said that refined supervision can allow Indonesia to fully grasp export flow and pricing information, which will facilitate the country to improve the management of strategic commodities and reduce reliance on overseas middlemen.
He proposed that this framework needs to be viewed in conjunction with the revised regulations on foreign exchange earnings from natural resource exports: the two policies will jointly strengthen the supervision of export repayments, improve the country’s foreign exchange liquidity, and consolidate the long-term economic risk resistance.
The policy is intended to block the fiscal and tax losses caused by low declared values and transfer pricing, so that more profits from commodities can be retained in the domestic economy.
In addition to this fiscal and tax governance goal, strict supervision can improve the traceability and transparency of the entire palm oil industry chain, help Indonesia meet the increasingly stringent sustainable access requirements of the international market, and adapt to EU deforestation regulations and other trade rules.
However, Ramaditia reminded that the effectiveness of the policy depends entirely on the level of implementation, especially whether Danantara Resources Company’s digital infrastructure carrying capacity and operational efficiency can undertake Indonesia’s massive bulk commodity export business.
Policymakers need to strike a balance: while strengthening supervision, avoid adding too many administrative procedures that will hinder the efficiency of export operations.
Although the Indonesian government states that transactions still adhere to market-oriented principles, once the market determines that the authorities have excessively interfered with the pricing mechanism, it will still cause companies to worry about the efficiency of market operation.
Analysts concluded that the framework was initially regarded as an export governance policy, and the key to its long-term impact lies in whether it can truly improve the transparency and traceability of the entire industry chain without disrupting trade flows.
Currently, Indonesia and Malaysia still dominate the global palm oil trade pattern, and the international market’s requirements for industrial chain traceability, sustainable certification, and supply chain transparency continue to rise, and both countries are facing corresponding compliance pressures.
