Crude palm oil producers come under fire<\/p>\n
JAKARTA (JP): President Soeharto, while hinting that the
\ngovernment will maintain export tax on crude palm oil (CPO), said
\nyesterday that producers must put high priority on the domestic
\nmarket and people's best interests.<\/p>\n
"CPO producers must not think only about foreign currency
\nearnings," Soeharto was quoted as saying by Beddu Amang, the
\nrecently installed chairman of the National Logistics Agency
\n(Bulog), after their meeting at the Bina Graha presidential
\noffice.<\/p>\n
"They (CPO producers) must also show concern for the needs of
\nthe people and their welfare," Beddu, whose office controls the
\ndistribution of cooking oil and other strategic food stuffs,
\nquoted the President as saying.<\/p>\n
Cooking oil and CPO are considered as strategic commodities in
\nIndonesia, whose population is the fourth largest in the world.<\/p>\n
Soeharto also said yesterday that CPO exporters are obligated
\nto "assist" state-owned palm oil plantation companies in
\n"satisfying the domestic market".<\/p>\n
The government, however, will not limit CPO exports, he said.<\/p>\n
The President's remarks came amid recent debates started by an
\nappeal last week by the Federation of Edible Oil and Fats
\nAssociation (FAMNI), which called for the cancellation of export
\ntax on CPO, which had affected Indonesia's stakes in overseas
\nmarkets.<\/p>\n
The government significantly raised the rates of export tax on
\nCPO last year in order to stabilize domestic prices, encourage
\ninvestments in palm oil plantations and protect local producers
\nof cooking oils, which are mostly controlled by the Salim and
\nSinar Mas conglomerates.<\/p>\n
FAMNI claimed that the export tax was imposed when CPO prices
\non the world market reached their highest level since 1984 to
\nUS$700 per ton. Analysts and officials expect CPO prices to go
\ndown to $460 per ton this year.<\/p>\n
Interestingly, the increase in export tax for CPO took place
\nlast year, when the country's CPO production exceeded domestic
\ndemand.<\/p>\n
Bulog figures show that the domestic demand for CPO reached
\n2.5 million tons last year, while production was 4.5 million
\ntons.<\/p>\n
Beddu said that the figures will most likely stay the same
\nthis year.<\/p>\n
Prices<\/p>\n
The recent debates on CPO policies also came amid growing
\nconcern about the escalating prices of cooking oils throughout
\nthe country over the last two months despite Bulog's market
\ninterventions and the export tax.<\/p>\n
Although the precise cause of the price rises is yet to be
\ndetermined, analysts generally blame the rise in demand prior to
\nthe Idul Fitri holiday early next month.<\/p>\n
Various local news reports said that up to last Saturday,
\nretail prices of the Salim-produced Bimoli cooking oil reached Rp
\n2,400 per kilogram at Jakarta market places, far higher than
\nBulog's target price of Rp 1,300.<\/p>\n
Beddu reminded the press yesterday that Bulog, assisted by the
\nSalim Group -- this group controls about 60 percent of the
\ndomestic market -- began an operation last week by selling
\ncooking oil directly to consumers at 17 different markets in
\nJakarta.<\/p>\n
He also said that this operation is being carried out without
\ninvolving distributors, who have been blamed by both the
\ngovernment and CPO producers as the culprits of the price
\nincreases.<\/p>\n
"Past interventions failed because we still involved
\ndistributors," Beddu said.<\/p>\n
Production<\/p>\n
In the meantime, Bisnis Indonesia daily yesterday quoted Wayan
\nR. Susila and Bachtiar Abbas, two leading agricultural experts,
\nas saying that, contrary to the objective, the CPO export tax
\npolicy will not encourage greater domestic production in the long
\nrun.<\/p>\n
The two experts said that, based on their joint research,
\ndomestic CPO production will reach 8.64 million tons per year by
\n2005 if the export tax is abolished.<\/p>\n
In contrast, if the policy is maintained, domestic production
\nby 2005 will only reach 8.48 million tons, 1.8 percent less than
\nwhat could be achieved under a different scenario.<\/p>\n
In comparison, figures from the Ministry of Agriculture show
\nthat by 2005, Indonesia's annual production of CPO will reach
\n9.89 million tons, about the same level as that of Malaysia,
\ncurrently the biggest CPO producer in the world.<\/p>\n
It is unclear whether the official figures take the export tax
\ninto account.<\/p>\n
Wayan and Bachtiar also said that the export tax policy will
\nhurt smallholders.<\/p>\n
"Without the tax, smallholders can make about Rp 174 per
\nkilogram of fresh fruit. In contrast, the export tax will lower
\ntheir earnings to only Rp 159 kilogram of fresh fruit," they
\nsaid. (hdj)<\/p>",
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