Ban on CPO exports finally lifted

JAKARTA (JP): The government has finally lifted its ban on exports of crude palm oil (CPO) and its byproducts, beginning today, through a ministerial decree.

The decree, signed last Friday by Minister of Industry and Trade Mohamad "Bob" Hasan, ended the much-criticized ban on the export of CPO, refined bleached deodorized (RBD) palm oil, crude olein and RBD olein.

"With this decree, the trade of CPO and its derivatives can now be conducted freely," the decree says.

But the decree did not mention the export taxes which had been mentioned earlier would replace the ban.

Some traders have indicated that the export taxes will be 40 percent for CPO, 38 percent for RBD palm oil and crude olein, 4 percent for RBD stearin and zero percent for palm kernel oil and RBD palm kernel oil.

Abolishing the palm oil export ban was one of the measures agreed by the Indonesia government earlier this month with the International Monetary Fund (IMF) in exchange for the continued disbursement of a $43-billion bailout fund.

The agreement requires the government to remove the ban on palm oil exports and replace it with an export tax of 40 percent by today.

In January, Hasan's predecessor Tunky Ariwibowo banned the export of palm oil and olein as well as CPO derivatives including stearin and palm kernel oil to stabilize soaring prices of cooking oil in the domestic market. But the measure failed to ensure the desired price stability.

The monetary crisis has seen the rupiah's value collapse by more than 70 percent against the U.S. dollar since last July, prompting a sharp increase in prices of most commodities.

The ban also created confusion and frustration among palm oil traders, who have been baffled by inconsistent government statements regarding its continuance.

On Jan. 15, the government agreed in the IMF's second reform package that it would remove the ban in April, but later backtracked on its promise.

This and several other backtracks on promised reforms prompted the IMF to review its bailout package for Indonesia, which in turn led the country to negotiate another deal with the Fund on April 8.

The Ministry of Industry and Trade has also issued several decrees easing export restrictions of other forestry products including logs, sawn timber and rattan. (das)