TEMPO Interactive, Jakarta: The Indonesian Vegetable Oil Industry Association (GIMNI) has proposed that the crude palm oil (CPO) export levy be seven percent rather than 1.5 percent.
The proposal has taken into account the capabilities of downstream industries and palm oil farmers.
Martua Sitorus, GIMNI General Chairman, said businesspeople agreed and supported the government’s plan to develop CPO downstream industries.
“Indonesia has been exporting CPO for 30 years. Does it still want this to continue?” he said.
Sitorus explained that around 4.8 million tons, or 70 percent of Indonesia’s CPO production, are exported.
However, Malaysia only exports 1.8 million or 26 percent of its total CPO production. Malaysia exports more processed products, around 12 million tons or 63.5 percent. Regarding Indonesia, it only exports the product of around 7.2 million tons or 37.5 percent.
Previously, palm oil producers rejected the government’s plan to raise levies and to restrict exports.
The policy plan will cause CPO prices to drop and farmers’ incomes to decrease.
Producers said that if export levies were raised by US$1 per ton, then palm oil production will go down by 0.14 percent.
According to Sitorus, GIMNI’s proposal is to implement progressive export levies of seven percent up until 2012.
This been calculated taking into account the effect on fresh palm fruit stems.
Based on GIMNI’s calculations, the effect of the export levies rise on fresh fruit stems is only Rp19 per kilogram or 1.9 percent (now fresh fruit stem price is Rp995 per kilogram).
Sitorus went on to say that downstream industry development would provide added value and create job opportunities.
In addition, Indonesia would not depend on downstream industries abroad and be able to minimize the price of domestic cooking oil.