Indonesian export availability of waste-based biofuel feedstocks used cooking oil (UCO) and palm oil mill effluent (Pome) are set to remain tight under the country's latest domestic market obligation (DMO) policy which came into force this week.
Under updated trade ministry regulation 30 of 2022 released on 23 May, Indonesian suppliers must prove domestic cooking oil sales and obtain a permit (PE) to export crude palm oil (CPO) and its derivative products. The regulation text names refined, bleached and deodorised (RBD) palm oil, RBD palm olein and UCO as CPO derivatives. HS code 230690 is listed in an annex but Pome is not referred to in the regulation text, leaving the status of the residue unclear as under previous decrees.
To obtain a PE, exporters must submit proof of having distributed bulk cooking oil to retailers in line with prevailing DMO requirements and at the government-set domestic price obligation (DPO). They must also show evidence of having bought CPO at market cost. Business details of producers and exporter companies cooperating to meet the DMO must be submitted through an electronic system.
Ministers announced on 23 May that companies must retail 1mn t of cooking oil locally to obtain a PE for 3mn t of exports under the current phase of the DMO, but that the government would tweak volumes and DPO requirements periodically as domestic market conditions change.
Small-scale UCO collectors — that make up around 90 pc of Indonesia's market share — say they will struggle to fulfill the 1:3 DMO as they did under previous iterations of the policy as they do not have established access to CPO and palm olein supply chains. Large-scale palm oil producers are likely to benefit and grow their share of the UCO export market under the policy, they say.
HS 230690 denotes Pome with free fatty acid (FFA) content below 20pc, while Pome with FFA exceeding 20pc — often exported under HS codes starting 2406, 1522 and 3823 — is not mentioned and should technically be unencumbered by the DMO. But some Indonesian Pome suppliers expect roadblocks anyway after meeting similar challenges during previous phases of Indonesia's export restrictions.
Many customs offices classify all Pome under 230690 and will not clear "Pome" cargoes with varying HS code labels. Some suppliers say they had such cargoes stopped and were asked to resubmit under 230690 with a PE during the last DMO period. To avoid this risk, several Pome buyers say they will now only be targeting suppliers who can export under 230690 with an export permit.
