80% of CPO products to be sold locally

JAKARTA (JP): Indonesia's palm oil producers have agreed to sell 80 percent of crude palm oil products on the domestic market, despite the government's recent decision to remove an export ban on the commodity.

Chairman of the Association of Edible Oils industries (AIMMI) Navis Daulay said yesterday the consensus had been reached to ensure a sufficient supply was available in Indonesia.

He said the initiative to sell the majority of their output on the domestic market had come from his association and the Association of Indonesian Palm Oil Producers, not from the government.

"We expect to produce a total of 293,000 tons of CPO this month to supply domestic demand of 260,000 tons," Navis told The Jakarta Post in a telephone interview.

The Federation of Edible Oil and Fats Associations also said yesterday that 18 companies had agreed to supply CPO locally, including the joint marketing office of state-owned PT Perkebunan Nusantara (PTPN), which intends to supply 120,000 tons of the 293,000 tons promised.

On April 22, the government lifted a three and a half-month ban on the export of CPO and its derivatives, replacing it with an export tax of up to 40 percent to protect local supply.

Traders said the high tax meant that exporting was no longer profitable, prompting companies to sell their products on the local market rather than overseas.

The Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said earlier that the country's major private CPO producers had also agreed to sell half of their production on the domestic market this year.

Ginandjar said the combined output of the four companies, Sinar Mas, Salim, Radja Garuda Mas and Astra Group, would reach 1.62 million tons this year, 29 percent of Indonesia's total projected CPO output in 1998 of 5.6 million tons.

FAMNI's chairman Derom Bangun predicted the exported volume of CPO would drop by at least 15 percent this year from 2.3 million tons last year, mainly due to the export ban, which was introduced to stabilize cooking oil prices.

CPO producers also agreed on April 13 to sell CPO, the raw material required to manufacture cooking oil, to processing factories at Rp 2,640 per kilogram so that the price of cooking oil could be lowered to Rp 3,250.

But Navis said cooking oil prices were continuing to hover between Rp 3,500 and Rp 3,600 per kilogram because most traders were holding stocks and had no need to make new purchases.

"But at least we have succeeded in keeping the price from soaring," he added. (das)