As the world's largest producer and exporter of palm oil, Indonesia has long lacked the pricing power that matches its market share. Now, President Prabowo of Indonesia intends to change this situation.
According to the South China Morning Post report on August 24th, Prabowo announced that Indonesia will establish a Strategic Minerals and Commodities Exchange (BMKS), with plans to launch operations on January 1st next year. The exchange will cover major export commodities such as palm oil, nickel, tin, coal, and coffee.
We do not simply wish to be producers of global commodities, we also must become makers of the prices for these commodities. Prabawo said. In addition to vying for price control rights, the new exchange will strengthen the Indonesian government's regulation over export pricing, transaction volume, and taxation.
Among them, palm oil is regarded as the most direct competition.
Indonesia is the world’s largest producer and exporter of palm oil, accounting for more than half of the global palm oil export market throughout the year. Last year, Indonesia's production of crude palm oil reached 51.66 million tons, far exceeding the 20.28 million tons produced by Malaysia, the second-largest producer.
However, the futures of crude palm oil (FCPO) traded on the Malaysia Derivatives Exchange are actually widely used by global traders for pricing and hedging purposes.
April 9, 2026, Naganraa, Aceh Province, Indonesia: Farmers use modified motorcycles to harvest and transport palm oil fruits. Visual China
Singapore Yusof Ishak Institute for Southeast Asian Studies researcher Siwage Dharma Negara pointed out that Indonesia hopes to leverage its export advantages in commodities such as palm oil, nickel, and coal to increase its international pricing influence and bargaining power in commercial negotiations. At the same time, it aims to better control aspects such as export prices, quantities, and tax situations.
However, a production advantage does not equal a pricing power. Indonesia introduced a spot market for palm oil in the form of an exchange in 2023, but the trading volume was limited, and it still cannot compare with FCPO’s position in international price discovery and risk hedging. Data shows that last year, FCPO’s daily average trading volume reached 80,399 lots, and this large trading scale attracted planting companies, spot traders, and international investors, further consolidating its liquidity advantage.
Jakarta Economic and Legal Research Center Director Bhima Yudhistira Adhinegara also believes that it is not easy to make overseas buyers abandon their existing price benchmarks, especially given the mature contract pricing systems already formed by major buyers such as China and India.
Analysts believe that even if it cannot replace Malaysia’s FCPO in the short term, the new exchange could help Indonesia establish a more influential domestic spot price benchmark. Additionally, with its status as the world’s largest palm oil supplier, it could gain more say in international trade negotiations.
