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Beef is nearly twice as expensive in Indonesia as in the international market. This creates amassive challenge for around 28 million poor people in the country and contributes to Indonesia’slow beef consumption compared to its neighbors, including the Philippines, Malaysia, andVietnam. Low beef consumption in turn contributes to the fact that around 29% of children underthe age of five in Indonesia suffer from chronic malnutritionThe government claims that domestic supply is able to meet most of the demand for beef, but it isexpensive due to a long and complicated distribution process. They argue that the solution to highbeef prices is to shorten the distribution process by making government agencies responsiblefor most distribution and imposing a nationwide price ceiling for consumers. However, thiscentralized approach is difficult to implement. Carrying out distribution alone would drain thegovernment’s budget, costing nearly IDR 713 billion (USD 52.8 million) to cover the complicatedtransportation needed to reach the Indonesian archipelago. If the government instead leavesdistribution to retailers, then retailers will be left unable to comply with the price ceiling if theyare to cover production and transportation costs, which would make the ceiling ineffective.A better alternative is relying more on imported beef. Imported beef has a much shorterdistribution chain, and beef in the international market is nearly half the price of domestic beefin Indonesia. Imported beef would provide consumers with more affordable supply as domesticbeef retailers struggle to comply with the price ceiling. Therefore, we recommend four regulatorypolicy changes.First, the government should remove Regulation of the Minister of Trade (MOT) 27/2017, whichimposes a price ceiling on beef, and instead use international trade to lower consumer prices.Second, the government should revise MOT 59/2016 Article 10 (1) and Article 11, which resultsin a long import licensing process that takes more than 30 working days to complete. Thisprocedure must be simplified and shortened, and import licensing should focus on the speedyand reasonable processes of identification and quality checks. Third, the government shouldrevise MOT 59/2016 Article 9 (1 and 2), which allows beef from countries that are not entirely freeof animal diseases to be imported only by state-owned enterprises. As stipulated in Indonesia’sagreements with the World Trade Organization (WTO), all qualified beef importers, private orstate-owned, must have the same opportunities to import beef into the country. Fourth, thegovernment should remove MOT 59/2016 Article 19, which forbids imported beef in traditionalmarkets. A large majority (70.5%) of markets in Indonesia are traditional markets, so thisregulation hampers the ability to access imported beef. Allowing imported beef into traditionalmarkets will ensure a more reliable beef supply because it will come from various sources. Thiswill help beef prices stay competitive and eventually benefit consumers.

Beefing Up the Stock: Policy Reform to Lower Beef Prices in Indonesia