Indonesia on Thursday took a drastic step and implemented a thorough ban on palm oil exports to help reduce domestic shortages and hold down prices. The move comes as the world’s largest producer of the commodity flip flopped on the policy that analysts said was taken hastily by Jakarta to defend President Joko Widodo ’s carefully-crafted populist image among voters. In a televised address on Wednesday night, Widodo admitted the decision to halt the exports of oilseeds and products intended for edible oils, including crude palm oil (CPO), will carry “negative impacts” on Indonesia’s foreign exchange reserve and tax income. “It is ironic that we, as the world’s largest producer of palm oil, are having difficulties getting cooking oil,” Widodo said. “As president, I can’t allow that to happen, it’s been four months of scarcity and the government has tried various policies but they haven’t been effective. Therefore, the government decided to prohibit the export of raw materials for cooking oil and cooking oil to foreign countries.” The shortage has been exacerbated by poor regulation and producers who are reluctant to sell at home because high international prices have made exports more profitable. The shortage has also been partly caused by Russia ’s invasion of Ukraine that has sent the prices of a number of staple foods skyrocketing globally. Widodo, known widely as Jokowi, initially announced the crude palm oil export ban on Friday, only to have it reversed by his coordinating minister for economic affairs Airlangga Hartarto on Tuesday, who said the ban would only apply to products used in local production of cooking oil. Indonesia stuns markets as it widens palm oil export ban The last minute policy flip-flop underlines Jakarta’s tendency to launch a widely-significant policy without having a proper assessment on its impacts, says Bhima Yudhistira, executive director at Jakarta-based think tank Center for Economic and Law Studies (Celios). “The ban shows that Jokowi is seeking to boost his popularity by imposing these nationalist policies, but the CPO ban will only make palm oil farmers feel that [Jakarta] is betraying them,” Bhima added. Arya Fernandes, political researcher from Centre for Strategic and International Studies (CSIS) Indonesia, said the decision to impose a complete ban on palm oil exports might be influenced by the declining approval rating of Widodo’s administration due to a range of domestic issues, particularly the rising prices of staple foods and fuel, as well as the rumour the president is seeking to rule beyond his two-term mandate, which ends in 2024. Earlier this month, students took to the streets of several cities to protest the rumour. “First the public rejected the three-term idea, then they are facing rising prices of foodstuff. All of these are driving executives to find a policy to please the public,” Fernandes said. A survey released on Tuesday by Jakarta-based pollster Indikator Politik found public approval of Jokowi fell to 59.9 per cent in April, from 71.7 per cent in February, mainly due to climbing prices of staple goods, including cooking oil. A survey by research body Litbang Kompas found that seven out of 10 Indonesians are having difficulties in purchasing daily needs. Most respondents, 66.3 per cent, viewed Jakarta as unable to control the soaring prices of staple goods. In Indonesia, the simple act of buying cooking oil has turned deadly Indonesians are sensitive to prices of staple goods and fuel, and when they’re on the rise, political elites in Jakarta get spooked by the potential of social unrest. In 1998, nationwide protests ensued after the Asian economic crisis drove up the prices of basic goods and fuel, eventually leading to the downfall of former dictator Suharto. In 2005, the plan to increase the price of fuel under then-president Susilo Bambang Yudhoyono, led to large scale protests, as well as in 2013. Under his leadership, fuel prices were increased three times, which were always met with resistance from the public and lawmakers. Jakarta’s decision this time to ban palm oil export will be short term, just like its ban on coal exports in January, Bhima of Celios said. The government plans to resume exports when the price of bulk cooking oil in local markets falls to 14,000 rupiah (US$0.97) per litre. It has soared 70 per cent in recent weeks to 26,000 rupiah ($1.80). The total ban of palm oil export will also drive over supply in the market that will lead to the decline in farmers’ income, Bhima added. Henry Saragih, chairman of Indonesian Farmers Union (SPI), said his members incurred over 250 billion rupiah (US$17.2 million) in losses since Widodo announced the export ban and demanded the government compensate farmers. The price of oil palm fresh fruit bunch has halved from the normal price of 3,000 rupiah (US$0.21) per kg since the announcement, he said. Indonesian palm oil export ban could ‘lead to unrest’ as inflation hits poorest “I know the government was trying to make the price of cooking oil affordable to the public, but this has achieved the complete opposite. The farmers are now losing money, especially ahead of Eid, we are also consumers of cooking oil. This ban is very wrong,” Saragih added. Indonesia produces about 60 per cent of the world’s palm oil, with one-third consumed domestically. India , China , the European Union and Pakistan are among its major export customers. Palm oil is used in a range of goods such as chocolate spreads, instant noodles, detergent, soap, and cosmetics. Additional reporting by Agence France-Presse