The three-month investigation by the respected commission for the supervision of business competition (KPPU) -- an independent body that looks into unfair and monopolistic business practices -- could eventually open the soybean market to more players and lead to government policy changes.
"We started a soybean investigation," Junaidi, head of public relations at the KPPU told Reuters by text. "We began monitoring the soybean market during the first half of the year and this became more intense during the recent price hikes."
Indonesia buys in 70-80 percent of its soybean needs, mainly from the United States, and is set to become Southeast Asia's biggest importer in 2013/14 with a record 2.1 million tonnes, according to United States Department of Agriculture data.
Importers require an import permit, which is issued by the government, and the market is dominated by a handful of companies.
These include FKS Multi Agro Tbk, which has about 60 percent of the market share according to industry sources, Sungai Budi Group, with about 20 percent and Cargill Inc , with around 10 percent.
Indonesian soybean prices have spiked by more than 15 percent this year to trade at around 10,665 rupiah ($0.93) per kg, while domestic stocks of the oilseed have fallen to multi-year lows at about 300,000 tonnes, industry sources say.
Global soybean prices have risen in recent weeks to trade near 11-month highs due to concerns over dry weather in top supplier the United States, while Indonesia's rupiah has fallen to a near 4-1/2 year low, making imports more expensive.
The KPPU's investigation will look at soybean traders that control more than 50 percent of the total import market in Indonesia, and the system of issuing import permits by the Indonesian Trade Ministry, Junaidi said.
The regulator, which previously instigated changes in the country's sugar market, has the power to break up and fine companies, and make policy recommendations to the government.
The government has sought to encourage domestic output but policy changes over the past six months, such as forcing traders to buy domestic supplies and imposing a floor and ceiling price for buyers and sellers, have added to market uncertainty.
Imports have slowed, and the Indonesian Joint Cooperatives of Tempe Tofu Makers went on strike last week to protest against rising soybean prices.
Although the government has removed import quotas, it has maintained the controversial system of issuing import permits, which traders say is too slow to react to demand spikes and at risk of corruption.
The government also rejected a plan to ditch its import tariff for soybeans last month, even though the proposal was backed by the trade ministry.
Trade Minister Gita Wirjawan says 1.1 million tonnes of soybean import permits have been issued for the year to date, with suppliers in Paraguay, Argentina and Brazil sought.
"We started a soybean investigation," Junaidi, head of public relations at the KPPU told Reuters by text. "We began monitoring the soybean market during the first half of the year and this became more intense during the recent price hikes."
Indonesia buys in 70-80 percent of its soybean needs, mainly from the United States, and is set to become Southeast Asia's biggest importer in 2013/14 with a record 2.1 million tonnes, according to United States Department of Agriculture data.
Importers require an import permit, which is issued by the government, and the market is dominated by a handful of companies.
These include FKS Multi Agro Tbk, which has about 60 percent of the market share according to industry sources, Sungai Budi Group, with about 20 percent and Cargill Inc , with around 10 percent.
Indonesian soybean prices have spiked by more than 15 percent this year to trade at around 10,665 rupiah ($0.93) per kg, while domestic stocks of the oilseed have fallen to multi-year lows at about 300,000 tonnes, industry sources say.
Global soybean prices have risen in recent weeks to trade near 11-month highs due to concerns over dry weather in top supplier the United States, while Indonesia's rupiah has fallen to a near 4-1/2 year low, making imports more expensive.
The KPPU's investigation will look at soybean traders that control more than 50 percent of the total import market in Indonesia, and the system of issuing import permits by the Indonesian Trade Ministry, Junaidi said.
The regulator, which previously instigated changes in the country's sugar market, has the power to break up and fine companies, and make policy recommendations to the government.
The government has sought to encourage domestic output but policy changes over the past six months, such as forcing traders to buy domestic supplies and imposing a floor and ceiling price for buyers and sellers, have added to market uncertainty.
Imports have slowed, and the Indonesian Joint Cooperatives of Tempe Tofu Makers went on strike last week to protest against rising soybean prices.
Although the government has removed import quotas, it has maintained the controversial system of issuing import permits, which traders say is too slow to react to demand spikes and at risk of corruption.
The government also rejected a plan to ditch its import tariff for soybeans last month, even though the proposal was backed by the trade ministry.
Trade Minister Gita Wirjawan says 1.1 million tonnes of soybean import permits have been issued for the year to date, with suppliers in Paraguay, Argentina and Brazil sought.
