Fri, 14 Mar 2008
From: The Jakarta Post
By Novia D. Rulistia
The Jakarta Post

Despite new tariffs on export duties and a more restrictive export regulation on crude palm oil (CPO), exports for this year are expected to increase by around 27 percent, says the Indonesian Palm Oil Association (GAPKI).

"The high export duties will not affect our CPO exports too much," GAPKI executive chairman Derom Bangun said Thursday.

He estimated the country would produce 18.4 million tons of CPO this year, with 4 million tons set to be consumed domestically, mostly as raw material for cooking oil, around 300,000 tons to be used in biodiesel projects, while the remaining 14 million would be exported.

In 2007, Indonesia exported around 11 million tons of CPO, a drop of 9 percent from 12.1 million tons in the previous year despite an increase in production from 15 million tons in 2006 to 17 million tons last year.

"From the total production last year, plenty was used for biodiesel and was exported in its derivative form," Derom said on the sidelines of a workshop on ways to accelerate development of CPO plantations in Central Kalimantan.

The government recently issued a new "progressive" tariff on export duties which states that CPO priced between US$1,100 and $1,200 per ton will be charged a duty of 15 percent per ton. The duty will increase to 20 percent if the price is between $1,200 and $1,300 and to 30 percent if the price exceeds $1,300 per ton.

On Thursday, the global price of CPO reached $1,280 per ton.

While the tariff is not expected to affect exports of CPO, Derom said the policy would cause other problems for producers.

"CPO producers object to the new progressive tariff," he said, adding that the tarrifs would only lead to an increase in CPO smuggling.

GAPKI chairman Akmaludin Hasibuan said the new regulation was a short-term measure, and would not solve problems caused by increasing cooking oil prices in the domestic market.

He said the progressive export duty made it difficult for producers to consolidate and increase the productivity of their factories.

The government said it would apply tougher export regulations to help address smuggling concerns. The Directorate General of Customs and Excise and the Development and Financial Supervision Agency (BPKP) are being assigned to audit and verify the entire export process.

Derom said the move was good for business and would not affect CPO export performance.

"It's a good move. Port control has to be intensified, documents should be checked and rechecked," Derom said.

Indonesia is the biggest CPO producer in the world, yet its exports are lower than Malaysia's.

"The problem is that there are still plenty of potential plantation areas that are yet to be developed," Kadin's committee head for economic players empowerment, Natsir Mansyur, said.

He said CPO plantation areas in Indonesia were divided into two parts, west and east. Most CPO plantations are still focused in the west, which includes Sumatra, where the east is hampered by a lack of infrastructure and management.



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