Jakarta. Indonesia’s plantation industry pushed back on Thursday after President Prabowo Subianto announced a policy requiring natural resource commodity exports to be routed through a single state-controlled entity under sovereign wealth fund Danantara Indonesia.

Indonesian Palm Growers Association chairman Mansuetus Darto warned the government not to repeat what he described as a failed policy from the Suharto era, when clove trading was centralized under the BPPC marketing agency linked to politically connected elites.

“We once experienced the bitter consequences of commodity trade monopolies carried out in the name of national interest, which ultimately destroyed farmers and enriched only a small elite,” Darto said. “The state must not repeat the same mistake with palm oil.”

He argued that a single export gate under Danantara Sumberdaya Indonesia could reshape Indonesia’s palm oil trade while creating risks of monopoly practices, rent-seeking, and excessive concentration of export control among politically connected groups.

Darto also criticized the government for discussing the policy without meaningful involvement from palm oil farmers, cooperatives, and businesses, saying the industry supports millions of Indonesian families and regional economies.

Speaking before parliament on Wednesday, Prabowo defended the policy as a strategic effort to prevent up to $150 billion in annual state revenue leakages caused by alleged under-invoicing by exporters.

Finance Minister Purbaya Yudhi Sadewa said authorities had investigated 10 palm oil companies suspected of manipulating export values.

The proposal also drew criticism from S&P Global Ratings, which warned that centralized export controls could hurt exports, weaken state revenues, and create greater uncertainty for investors and financial markets.

Sudarsono Soedomo, a professor at Bogor Agricultural University, cautioned that centralizing exports would not automatically solve governance and law-enforcement weaknesses.

Palm oil trading, he said, depends heavily on speed, flexibility, buyer networks, and international market confidence.

“If all transactions are centralized under a single entity, risks emerge in the form of inefficiency, slower decision-making, rent-seeking, conflicts of interest, and excessive discretionary power,” Sudarsono said.

"A single export gate is not the only solution. It may even be too extreme for what is essentialy an institutional governance problem."

Add as a preferred source on Google +