Domestically, Hasan represents Jokowi’s answer to resolving the soaring price of cooking oil amid supply chain disruptions that have occurred since January. His predecessor, former trade minister Muhammad Lutfi, was panned for his failure to get a grip of commodity prices despite being able to boost Indonesia’s export volumes for the past 18 months.

Regardless how one explains his rise, what should we expect during his term as trade minister?

Controversial forestry minister

Hasan’s appointment as a trade minister has been met with criticism by the public because of his track record as the Minister of Environment and Forestry in Susilo Bambang Yudhoyono’s second administration from 2009-2014.

Under his leadership, the ministry was blamed by environmentalists for allowing corporations to burn forests for plantations, resulting in hazardous smoke that affected neighbouring countries such as Singapore. Most controversial was the flurry of land concessions granted to timber and palm oil companies covering 1.3 million hectares of land between 2010-2013. Hasan was blamed by civil society organisations for contributing to widespread forest fires in October 2015.

His track record of working closely with palm oil corporations could make resolving the ongoing cooking oil crisis tricky. The political clout he has with them, however, could also serve as a powerful tool for him to sway palm oil companies from stockpiling or diverting domestic supply for the international market.

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Indonesians face soaring cooking oil prices as war in Ukraine disrupts global trade

Indonesians face soaring cooking oil prices as war in Ukraine disrupts global trade

Maintaining status quo before 2024

Given the limited period of his tenure before the 2024 election, Hasan is unlikely to introduce novel but potentially drawn-out policies and may continue with Indonesia’s current protectionist approach to trade.

Jokowi’s administration has increasingly relied on non-trade tariff barriers such as export restrictions to ensure adequate supplies of raw materials for local industries to control commodity prices. Indonesia currently has in place an export ban for agriculture, forestry, and mining raw commodities. The looming halal-certification regime under the Halal Certification Agency would also require both exporters and importers to obtain halal certifications. This adds another layer of administrative inefficiency.

As Asian food export bans bite, who will be hardest hit?

Hasan is likely to spend more time overseeing domestic commodity prices because of his business savvy in these markets. He used to run kitchenware production and travel bureau companies between 1988-2006, which are now managed by his daughter Futri Zulya Safitri.

His decision to perform blusukan, a Javanese term for impromptu walkabouts, to one of the traditional markets in East Jakarta on his first working day signals his grassroots approach, which might also be beneficial in boosting his personal brand and his party’s credentials ahead of the 2024 election.

Little international trade policy experience

Hasan’s tenure as trade minister has already been greeted with scepticism owing to what is seen as his lack of international trade experience.

This could pose a serious challenge for him as he will be expected to navigate the country’s trade policies, with an immediate priority being the global inflationary impact of the ongoing Russian invasion of Ukraine. Food-price inflation has already been gaining impetus and global supply disruptions has jeopardised the provision of key food items for Indonesia’s food industries, such as wheat.

The new trade minister would also need to ensure the flow of critical goods to support Jokowi’s signature policy in developing an electric-vehicle ecosystem. As Indonesia has no domestic sources of lithium, a consistent supply of lithium from overseas is essential to sustain Indonesia’s lithium battery production.

His lack of international trade experience also raises questions over his ability to take Indonesia’s ongoing trade negotiation with the European Union over the Comprehensive Economic Partnership Agreement (CEPA) over the line. Negotiations have progressed positively after the 11th round of discussions in November 2021, although Indonesia’s recent crude palm oil export ban in April 2022 has slightly set back negotiations.

Why did Indonesia suspend all exports of palm oil? One word: voters

Immediate priorities

Hasan’s extensive network with palm oil corporations and his knowledge of domestic commodity markets mean that domestic business associations are optimistic that he will successfully handle the cooking oil crisis.

However, his lack of experience in international trade affairs suggests that an immediate priority for him will be the appointment of a strong advisory team within the ministry with commendable experience and knowledge in international trade.

This is especially essential as Indonesia will chair the G20 forum in November 2022 and the Association of Southeast Asian Nations Summit in February 2023.

Apart from forming a credible advisory team, the new trade minister is expected to boost coordination across ministries and work closely with Jokowi’s economic advisers. Another crinkle to note will be how he manages his working relationship with the current finance minister Sri Mulyani, following a past disagreement over foreign debt elevation.

In the final analysis, Hasan’s choice and performance as trade minister will serve as a key indicator that the public will use in evaluating Jokowi’s legacy after his term ends in 2024.

Dedi Dinarto is an associate at public policy advisory firm Global Counsel. He observes political and regulatory changes in Asia with a special emphasis on Indonesia, drawing implications for global corporates and investors.