CPO export tax cut to 30% to help farmers income
JAKARTA (JP): The government announced on Friday a reduction in export tax on crude palm oil (CPO) to 30 percent from 40 percent in a bid to boost exports and farmers' incomes.
The Ministry of Trade and Industry's Director General of International Trade Djoko Moeljono said export taxes on CPO byproducts also had been lowered to as low as zero to 26 percent.
He said the decision was taken after seeing the continued decline in CPO prices and that of its byproducts on the international market.
"CPO prices in Rotterdam dropped significantly to US$410 per metric ton in early June from $510 in May. If we maintain the export tax at the current level, exporters will not export CPO because they would suffer a great loss," he said at a news conference.
The lower export tax, effective from Thursday, is expected to encourage the country's CPO producers to boost their exports, he said.
Under the new ruling, export taxes on CPO, bunches of fresh fruit and oil palm kernel was cut to 30 percent from 40 percent previously.
Export taxes on refined bleached deodorized (RBD) palm oil and RBD palm olein were lowered to 22 percent from 32 percent.
The government also slashed taxes on exports of crude olein to 26 percent from 40 percent, crude palm kernel oil to 20 percent from 30 percent and on RBD palm kernel oil to 15 percent from 20 percent.
It also reduced from 25 percent to 17 percent the export tax on prepackaged RBD olein not exceeding five kilograms in volume.
It lowered export taxes of crude stearin to 15 percent from 20 percent and of RBD stearin to 7 percent from 10 percent.
The government imposed zero export taxes on crude coconut oil and RBD coconut oil, from 15 percent and 10 percent respectively.
Director General of Domestic Trade Teddy Setiadi said the lower export taxes should not result in a steep increase in cooking oil prices on the domestic market because prices had been relatively stable in the past several months.
"Most domestic cooking oil processors currently have enough stock to supply the domestic market. So I predict no steep increase in the domestic prices of cooking oil in the coming weeks," he said.
He also said the lower export taxes would raise the prices of bunches of fresh fruit and oil palm kernel produced by farmers by between Rp 150 to Rp 300 per kilogram.
Djoko said the ministry also cut the reference prices used to calculate the payment of export taxes on CPO and its byproducts.
The new reference price of CPO was set at $365 per metric ton, a drop from $430. The new reference price of oil palm kernel is $85 per ton, refined bleached deodorized (RBD) palm oil is $395 per ton, crude palm olein is $385 per ton and RBD palm olein is $460 per ton.
The base price of RBD palm olein in up to five-kilogram packages was set at $455 per ton, while the reference price for crude palm stearin was established at $260 per ton. The new reference price for RBD palm stearin is $290 per ton, crude palm kernel oil is $435 per ton and RBD palm kernel oil is $460 per ton.
The new reference prices will be effective from June 3 to July 5.
Djoko acknowledged that export taxes should have been lowered three months ago after international prices showed a tendency to decrease early this year.
Djoko said the government planned to slash export taxes on CPO and its derivatives to as low as 10 percent by the end of this year.
"We are targeting to lower the export taxes to as low as 10 percent by the end of this year to comply with the government's agreement with the IMF (International Monetary Fund)," he said.
Indonesia, the world's second biggest producer of CPO, slapped the levy on CPO and its derivatives after the rupiah nose-dived at the onset of the financial crisis, making exports much more profitable than domestic sales and leading to staggering shortages of cooking oil.
Export tax was lowered to 40 percent in February, from the 60 percent imposed in September last year.
KDI
Teddy also announced that the government had lifted the monopoly granted to the Indonesian Distribution Cooperative (KDI) to distribute cooking oil on the domestic market.
"Under the Minister of Trade and Industry's decree signed today (Friday), all state-owned companies are also freed from the obligation to sell their CPO products to KDI," he said.
Previously, state-owned plantation companies were obliged to sell their oil palm kernels and CPO products to KDI.
The KDI was established in the middle of last year to replace the State Logistics Agency's (Bulog) role in distributing cooking oil in the country.
CPO produced by state-owned plantations account for over 35 percent of total domestic CPO production, Teddy said.
Teddy said Indonesia was expected to produce 5.6 million tons of CPO this year, an increase of about 4 percent compared to 5.4 million tons produced last year. (gis)