Rare Cooking Oil, Economist: Close Hoarding Gap, Government Must Master Distribution Channel

Illustration. (Photo: Doc. Antara)

JAKARTA - Recently, there has been a shortage of cooking oil, if any, the price is much higher than the highest retail price (HET) set by the government at Rp. 14,000. In the midst of the shortage, 1.1 million liters of cooking oil were found in three warehouses in the Deliserdang area, North Sumatra.

The findings of the alleged hoarding raise the possibility of other manufacturers doing the same thing.

Research Director of the Center of Reform on Economics (Core) Indonesia, Piter Abdullah, assessed that the scarcity occurred because there was a gap used by producers to hoard cooking oil.

"I think yes (there is a gap for producers to hoard cooking oil)," he said when contacted by VOI, Monday, February 21.

Piter also admitted that from the start he believed that there would be a possible market violation from the current shortage of cooking oil.

"I've said from the start that there will definitely be market violations. When global prices are so high while domestic prices are so low, there will be incentives to hoard and smuggle," he said.

Furthermore, Piter said, this possibility arises in order to prevent sellers from experiencing losses, especially in the modern retail market. Therefore, said Piter, anyone who has the opportunity to hoard will do it. In fact, not just one group of companies.

"Anyone who has the opportunity to hoard will hoard or even smuggle. I'm sure not only done by one party in North Sumatra," he said.

Sanctions are not enough

For your information, Trade Minister Muhammad Lutfi has warned cooking oil producers not to stockpile. The government, said Lutfi, is ready to give strict sanctions to bring it into the realm of law.

However, according to Piter, to close the gap for producers to hoard cooking oil, it is not enough just to impose sanctions. More than that, according to Piter, the government must control the distribution channels of these commodities.

"The government must control the distribution channel, for example by assigning Bulog. Production results from producers are directly taken by Bulog, to then be distributed to the community through market operations," he explained.

As previously reported, Trade Minister Muhammad Lutfi has lost his temper. He was furious after seeing firsthand that there were still business actors hoarding cooking oil (migor). He emphasized that the ranks of the Ministry of Trade would immediately take firm legal action against the perpetrators who were proven to have hoarded cooking oil.

"I remind you once again that the Ministry of Trade will definitely take the rogue perpetrators of hoarding cooking oil to justice," said Trade Minister Lutfi in a high-pitched tone during a sudden inspection (sidak) simultaneously to a number of areas in Indonesia that are experiencing a shortage of migraines, in Makassar, Thursday 17 February.