Tue, 22 May 2007
Trade Minister Mari Pangestu said Thursday (17/5/07) the government is watching if palm oil exports need to be taxed more to ensure domestic supply, but will wait a few more weeks to determine what it will eventually do to prevent cooking oil prices from rising further.

The government has been working with palm oil producers and oil processors to ensure that there is sufficient domestic supply at a lower price, the minister said.

The country exports about 80% of its CPO production. Pangestu said cooking oil prices have risen to Rp8,000 to Rp9,000 per kg in March and April from Rp6,500 at the start of the year. The administration's target range is between Rp6,500 and Rp6,800.

"This price stabilization program has been running for about two weeks. (Prices are) coming down a little bit, but not to our target yet," she told Dow Jones Newswires in an interview.

"We're going to give it another two to three weeks to achieve this before we evaluate whether we need to impose additional export duties."

Potential drawbacks of a higher export tax include lower returns for domestic producers -- one-third of whom are small producers -- and a drop in exports, which might be hard to gain back later, she said.



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