'A Tangled Thread' Cooking Oil Scarcity, Observer: Our Structure Is Too Oligopoly!

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JAKARTA - The scarcity of cooking oil has continued since the beginning of the year and has not yet been resolved. Because it is rare, even if there is a supply that is still available in the market, it is often at a very expensive price.

Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira, said that this problem could occur because the current structure of cooking oil producers in Indonesia tends to be too oligopy.

Based on data from the Business Competition Supervisory Commission (KPPU), for example, it can be seen that a number of cooking oil producers have a fairly high market share. Sequentially from the largest market share, namely 14 percent, 13.3 percent, 11 percent, and 8.2 percent.

From these data, it can be concluded that 46.5 percent of the national cooking oil market share concentration ratio is controlled by only four companies.

"That's why we have to dismantle the structure of the producer first, which turns out to be too oligopoly. This cooking oil producer is 40 percent more controlled by big producers. So a break up should be done. The assignment shouldn't be too big. small and not affiliated with each other, so that the market is not controlled by a large group of players," said Bhima, when contacted by VOI, Tuesday, March 8.

The strategy for this break-up, according to Bhima, is by taking examples from financial services companies and digital companies in the United States. Where they are asked to break up so that the big players are not too dominant in controlling the market.

In the absence of a large group that dominates market domination, according to Bhima, the cooking oil market mechanism will be fairer, especially for the community as the final consumer.

"That's one way that might be effective, so that many competitors don't dominate. That way the market can be fairer, especially for end-user consumers," said Bhima

However, Bhima also acknowledged that the break-up strategy took a long time to implement. Therefore, as a short-term solution, Bhima suggested that the government first fix the cooking oil trading problem in the market.

"For example, cooking oil to reach the consumer level needs to go through seven 'players' first. So we'll see where the problem is. If there is a distributor playing, who is it? Give punishment. So there must be law enforcement in the trade system, so make sure," said Bhima.

He added that if so far the Ministry of Trade still insists on claiming that the supply of cooking oil is in a safe condition, it can be ascertained that there are irregularities at the distributor level.

"Due to the fact that in the market there are even those who sell (cooking oil) far above HET (Highest Retail Price). So the government must also be critical. If you dare to claim that supply is safe, but then the evidence is that supply does not reach the lower classes, then it means there is distributors who play. Find out who is playing? Law enforcement must be carried out, "said Bhima.