Cash Aid for Cooking Oil

KOMPAS/RADITYA HELABUMI

Packaged cooking oil fills a display rack at one of the modern retailers in Jakarta, Wednesday (30/3/2022). The two-liter packaged cooking oil is sold for Rp 52,000-Rp 53,000 per package with a maximum purchase of two packages.

The government launched last week another cash aid (BLT) program for cooking oil to help ease the financial burden on the people, following its failure to curb the commodity’s rising prices.

The cash aid will be distributed to 20.5 million recipients of the Non-Cash Food Assistance (BPNT) and Family Hope Program (PKH), as well as 2.5 million kaki lima street vendors selling fried foods. Under the new cash aid program, each family will receive Rp 100,000 (US$7) per month for three months from April to June, with the money to be transferred in advance in April.

We view the cash aid as the government’s concern amidst the pressures on consumer buying power as a result of the high price of cooking oil, though what people really need are stable and affordable prices.

Also read:

> Government Launches Cash Aid Program for Cooking Oil

> Transparency in Determining Cooking Oil Price

The crucial issue concerning the BLT program is how to ensure that the aid will reach the targeted recipients. Past experiences, such as the distribution of social assistance programs during the pandemic, which also included cash aid, showed that gathering data for and distributing the aid both remained a problem.

However, we are also aware the BLT program will not completely resolve the tangled cooking oil problem. In the medium to long terms, it is necessary to improve the current market structure and cope with unfair competition in the cooking oil industry. The government needs to intervene because the problem is more fundamental than the issue of cooking oil.

The oligopolistic market structure that has created unhealthy competition should be done away with. The Business Competition Supervisory Commission (KPPU) should also take firm action against violators. It is also equally important to establish transparent and credible policies as well as an institution to cope with the cooking oil supply in the domestic market, as well as to determine price, distribution, incentives and fiscal policies.

KOMPAS/TOTOK WIJAYANTO

Rauf, a staple food trader at the Kebayoran Lama Market, South Jakarta, Monday (24/1/2022), pointed out that his cooking oil stock has not been sold since the government subsidized the price of cooking oil to consumers through modern retail.

The government should also have the courage to face the handful of big players or “cartels” that frequently controls the distribution of those strategic commodities that people really need. A “remove and fix” policy should be avoided because this could further add to the complexity of the problem.

The government has issued 11 policies his year alone to stabilize cooking oil prices and supplies. Although there are no longer reports on a shortage of supply, prices still remain high.

After releasing cooking oil under the market mechanism by removing its retail price ceiling (HET), we don’t know what other policies the government will take. However, issuing a regulation that can limit the entry of new players to the cooking oil industry as the KPPU has proposed and empower the National Food Agency could be the right approach.

Also read:

> Cooking Oil Shortage Mocks Palm Oil-Rich Island

> Cooking Oil and Food Task Force

The government plans to spend at least Rp 690 billion of the state budget to finance the three-month cash aid for cooking oil program. However, the amount could be higher if the cooking oil market cannot be stabilized.

In the 2022 state budget, the government has allocated Rp 431.5 trillion, or 16.9 percent of total state expenditures, for the social protection program. Government spending on social protection is likely to increase along with the rise in the global prices of food and crude oil. In the middle of this difficult situation, it would very regrettable if some people in society have the heart to sabotage or exploit opportunities for their own gain.

This article was translated by Hendarsyah Tarmizi.