Sun, 06 May 2007
Jakarta (ANTARA News) - The Indonesian government is still considering whether it would raise its export duty on crude palm oil (CPO) following the hike in the retail price of cooking oil in the country to Rp8,000 per kilogram.

"The rate of increase has yet to be set. We set the rate after evaluating the market operations currently being done by the producers. We hope however it would not have to be raised," director general of domestic trade Ardiansyah Parman said here on Friday.

The deputy for agriculture and marine resources, Bayu Krisnamurthi, said the export tax could be raised or lowered but the effectiveness of such decision would only be short-lived to secure domestic supply.

"A fundamental solution also be sought in view of fundamental changes that had taken place. The scheme would continue to be used in view of current developments, but no decision has been made," the deputy to the coordinating minister for the economy said.

The hike in the world price of crude palm oil had affected the domestic price of the commodity following the rising prices of other commodities such as sugar, soybean and corn, triggered by the emergence of the market of crude palm oil for biodiesel.

"The development needs to be responded to by all the relevant parties including the government," he said.

On a different occasion the director general of foreign trade, Diah Maulida, said the export duty was now still being discussed.

"It is still being discussed at the department of research and development. Do not let the decision only to reduce export competitiveness and the price at farmers` level," she said.

The stakeholders are currently conducting market operations to reduce the domestic price of cooking oil.

They promised to ensure the supply to the consumers. They also agreed to increase regular supplies, she said.

Ardiansyah said they had pledged to reduce the price to Rp6,800 - Rp6,500 per kilogram. "They said if they failed they would agree to have the duty raised. Evaluation will be done in June on the operations held in Makassar, Medan, Surabaya, Bandung and Jakarta," he said.

Asked about price subsidy Ardiansyah said it was not necessary because domestic production is much bigger than consumption namely 16.8 million tons while consumption reached only 3.8 to 4 million tons.

On whether it is possible to impose a law to regulate the price like in Malaysia he said it would only burden the government.

He said "under the law the government has to purchase the product if its price falls below standard. The government has no budget for it. If the floor and ceiling prices of all strategic commidities are fixed the consequence will be burdensome for the state finances. So we would rather let it be set by the market," he said.(*)



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