Cut on CPO export tax will boost exports: Federation<\/p>\n
JAKARTA (JP): The recent cut in export taxes on crude palm oil
\n(CPO) and its byproducts is expected to boost exports, although
\nthe industry considers the new tax level of 30 percent to be
\nstill too high.<\/p>\n
The chairman of the Federation of Indonesian Palm Oil
\nProducers, Derom Bangun, said the export tax reduction would make
\nIndonesian CPO-based products more competitive in international
\nmarkets.<\/p>\n
However, he urged the government to lower the export tax
\nfurther to 20 percent, which he said was a more suitable level to
\nencourage farmers to plant oil palms and boost exports.<\/p>\n
\"Although the 30 percent export tax is still too high, I am
\nconfident it will boost the competitiveness of Indonesian CPO
\nproducts in international markets.<\/p>\n
Derom said the cut would provide some relief to the industry.
\nNevertheless, producers have continued to prefer to export olein
\nto CPO due to higher prices and a lower export tax.<\/p>\n
The government slashed the export tax on crude palm oil (CPO)
\nfrom 40 percent to 30 percent in a bid to boost exports and
\nfarmers' incomes. It also lowered the export taxes on CPO
\nbyproducts to as low as zero to 26 percent.<\/p>\n
The new taxes will be effective from June 3 to July 5.<\/p>\n
The government said the decision was taken after seeing the
\ncontinued decline in CPO prices and that of its byproducts on the
\ninternational market.<\/p>\n
Indonesia, the world's second-biggest producer of CPO after
\nMalaysia, has tried several approaches to limit exports of CPO,
\nfrom which cooking oil, or olein, is processed.<\/p>\n
At the beginning of last year, the government banned the
\nexport of CPO in order to help meet the shortfall on the domestic
\ncooking oil market.<\/p>\n
Under pressure from the International Monetary Fund (IMF),
\nwhich is leading a bailout program for Indonesia, the government
\nthen agreed to lift the ban and replace it with a 40 percent
\nexport tariff.<\/p>\n
When that failed to limit exports, the government raised the
\ntax to 60 percent last July. It was lowered again to 40 percent
\nin February.<\/p>\n
Derom said the lower export taxes should not result in a steep
\nincrease in cooking oil prices on the domestic market because
\nprices had been relatively stable in the past several months.<\/p>\n
\"Most domestic cooking oil processors currently have enough
\nstock to supply the domestic market for the coming several
\nmonths,\" he said.<\/p>\n
Derom also said the lower export taxes would raise the prices
\nof oil palm fresh fruit bunches and oil palm kernel produced by
\nfarmers who have been under great pressure over the past several
\nmonths.<\/p>\n
The prices of fresh fruit bunches and oil palm kernel in
\nMedan, the country's main producing area of oil palm, currently
\nstand at Rp 320 (4 U.S. cents) per kilogram, compared to Rp 400
\nper kilogram in April.<\/p>\n
Fresh fruit bunches were traded at around Rp 580 per kilogram
\nbefore the export ban was slapped on them.<\/p>\n
Depressed prices of fresh fruit bunches have discouraged
\nfarmers and plantation firms from expanding their plantation
\nareas and enhancing the management of their plantations, because
\nrevenue from selling fresh fruit bunches could not meet the
\nsoaring prices of farming materials.<\/p>\n
According to the Indonesian Farmers Union, farmers suffered a
\nloss of about Rp 150 per kilogram of fresh fruit bunches sold at
\ncurrent prices.<\/p>\n
The union said that the export tax on CPO and its derivatives
\nshould be set at a maximum of 10 percent.<\/p>\n
Derom said he was optimistic that the lower export tax would
\nboost the country's CPO production to six million tons this year,
\nfrom 5.4 million tons produced last year.<\/p>\n
The government has said that it will slash export taxes on CPO
\nand its derivatives to as low as 10 percent by the end of this
\nyear to comply with its agreement with the IMF. (gis)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cut-on-cpo-export-tax-will-boost-exports-federation-1447893297",
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"sponsor": "Okusi Associates",
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