Jakarta. Indonesian palm oil businesses fear that the foreign exchange retention rule will take a toll on their working capital.

Indonesia has mandated natural resource businesses to park all of their foreign currency earnings from their exports in state-owned banks for at least 12 months. The regulation also caps rupiah conversion to just 50% of the proceeds. In other words, businesses will likely have less money at their disposal for operations. The palm oil industry, which has largely driven Indonesia’s overall exports, is subject to this new rule. 

Palm oil producer association Gapki warned that the government should consider the liquidity and the characteristics of the industry. According to their estimates, running a palm oil business requires mammoth-sized capital, while only clinching an average profit margin of between 10 and 15%.

"And now we [Indonesia] have the foreign exchange retention rule. We give our support, but perhaps don't rush the policy, especially if the condition shows it’s not feasible. This will only backfire on us,” Gapki chair Eddy Martono told a recent forum in Balikpapan.

“But Gapki is ready to support and partner with the government. We will not go against the government policies.”

Gapki's fiscal chief Yustinus Lambang Setyo warned that the lockup rule should pay attention to the liquidity and characteristics of the palm oil industry itself. Amid rising exports, businesses are keeping their fingers crossed that they can still maintain their export competitiveness against foreign suppliers. He also warned that businesses would have to tap additional bank financing facilities to support operations to narrow the capital gap, which could lead to elevated interest and production costs.

“What we should do for now is to make sure that the government effectively enforce existing rules. Any regulatory improvements should be accompanied by optimal implementation,” Yustinus said. 

The industry is also facing other costs. Palm oil businesses have to pay a duty of $148 per metric ton of their shipments. There is also an export levy of $124.56 per metric ton. The Central Statistics Agency (BPS) reported that Indonesian palm oil exports totaled $12.27 billion in the first half of 2026. The latest foreign currency lockup rule has been in effect since June.

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