Wed, 02 May 2007
Jakarta (ANTARA News) - Trade Minister Mari Elka Pangestu said there was as yet no need to increase the export tax on crude palm oil (CPO) to countervail an increase in the domestic price of cooking oil.

"No, there will be no increase (in the CPO export tax) since it is not necessary," the minister told the press after she and Industry Minister Fahmi Idris attended a meeting with representatives of a number of CPO producers` assocations here Tuesday.

She said an increase in the CPO export tax was not yet necessary as a number of big CPO producer associations had agreed to supply CPO at a lower price so that the cooking oil price could drop to Rp6.500 - Rp6.800 per kilogram.

She also said the government would not try to control CPO exports through the export tax or other mechanisms as CPO producers were prepared to help the government in pushing the cooking oil price down through a cross-subsidy, namely by making profits on CPO export now that the world CPO price was increasing, and lowering the margin of CPO sales to domestic cooking oil industries.

The CPO producers, namely PT Perkebunan Nusantara, PT Smart Tbk, PT Musim Mas, Wilmar Group, PT BEST, PT Astra Agro Lestari Tbk, Salim Group and PT Darmex Oil, had committed themslves to supplying 100,000 tons of CPO per month to meet the cooking oil needs of domestic middle- to upper-level consumers.

She said the policy of pushing down the domestic price of cooking oil would not disturb Indonensia`s CPO supply to the world market as Indonesia`s CPO production was voluminous enough.

The Agriculture Ministry had estimated that Indonesia`s CPO production this year would reach 16.5 million tons or up from 16 million tons last year whereas domestic need for CPO was 3.5 million tons.

"Thus CPO supply to the world market will not be disturbed. The world CPO price is also expected to drop starting in June as Indonesia`s CPO production will by then return to its normal level," she said.

In a similar vein, Derom Bangun, executive direcctor of the Federation of Indonesian Oil-Palm Businessmen (GAPKI), said domestic CPO producers would faithfully fulfill existing CPO export contracts.

"Nothing will change, none of our export contracts will be disrupted," he said.(*)



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