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Retailers threaten to sue gov't over $23.4m unpaid cooking oil subsidies

Jakarta Globe - May 6 2023

Investor.id, Jakarta – The Indonesian Retailer Association, or Aprindo, mulls suing the government if the promised subsidies aimed at keeping cooking oil price low aren't paid.

Aprindo Chairman Roy Nicholas Mandey said recently the government owes palm oil producers Rp 344 billion ($23.4 million) in unpaid subsidies since early last year.

In the wake edible oil shortage that drove up prices and triggered widespread criticisms in the world's biggest palm oil-producing country last year, the trade minister issued a regulation obliging retailers to sell cooking oil at Rp 14,000 or just below $1 dollar a liter, against the market price of Rp17,000-20,000.

"The government must pay the Oil Palm Plantation Fund Management Agency Rp 344 billion for the sales of 40 million liters [of subsidized cooking oil] from January 19-31, 2022. The debt comes as a result of the one-price policy," Roy was quoted by business news website Investor.id.

On Thursday, Roy met with Trade Ministry officials to discuss the matter but apparently, there was no confirmation about the government's willingness to repay.

Roy said the association will resort to a lawsuit only if all available options don't work.

He said retailers might reduce or even stop the purchase of cooking oil from producers which can lead to another shortage as one of the options to force the government to repay the debt.

"Not in the meaning that we stop selling [cooking oil] to consumers. If we stop selling it while in possession of stocks, we can be accused of hoarding. We will simply reduce or stop procurement – no supplies no sales," Roy said.

Another option is to take a portion of the proceeds from edible oil consumers' money, meaning a reduced payment to producers, he added.

The association expects the government to settle the issue in three months "before the noise from the elections intensifies".

Separately, Trade Minister Zulkifli Hasan said the ministry is seeking advice from the Attorney General's Office to respond to Aprindo's demand.

"We are willing to repay but the particular trade minister regulation has been repealed. There should be a legal ground for this. If we pay without any regulation, we risk going to jail," Zulkifli said.

He admitted that the current ministry budget has no allocation for cooking oil debt repayment.

Source: https://jakartaglobe.id/business/retailers-threaten-to-sue-govt-over-234m-unpaid-cooking-oil-subsidie