CPO export tax upped to 60 percent

JAKARTA (JP): The government has raised export taxes on crude palm oil (CPO) and some of its by-products to as much as 60 percent in another attempt to discourage exports, Minister of Industry and Trade Rahardi Ramelan said yesterday.

Rahardi said the export tax increase would enable the government to contain the escalating price of cooking oil in the country at around Rp 4,000 (28 U.S. cents) per kilogram.

"With the new export tax, we estimate that the domestic supply of cooking oil will be enough. CPO producers will be more interested in processing their products in the country," he told reporters and a group of major palm oil producers.

If producers continued to export, he said the government would be able to collect at least US$2.16 billion from export tax revenue of CPO, which is currently priced at US$650 per ton in the global market, to stabilize the local price.

The government raised taxes on CPO and crude palm olein exports to 60 percent from 40 percent and on refined bleached deodorized (RBD) palm oil and RBD palm olein to 55 percent from 35 percent.

It raised the taxes on exports of crude palm kernel oil to 50 percent from 35 percent, and on RBD palm kernel oil to 45 percent from 30 percent.

It also imposed new taxes of 60 percent on the fresh fruit bunches of oil palm and 40 percent on RBD olein in branded containers not exceeding 5 kilograms in volume.

But it lowered export taxes of crude stearin to 25 percent from 35 percent and of RBD stearin to 20 percent from 30 percent.

Export taxes of crude coconut oil and RBD coconut oil remained at 20 percent and 15 percent respectively.

Rahardi said the country relied on the palm oil producers' sense of nationalism to increase their supplies to the local market.

The price of cooking oil, an essential commodity for most Indonesians, has been on a staggering rise continuously in the domestic market since late last year despite a series of government efforts at stabilization.

Producers are more interested in exporting their products and earning profits in U.S. dollars due to the weakening of the rupiah. Some producers reportedly smuggled their products outside the country to dodge the huge export tax.

When questioned by a reporter whether the high tax would prove effective in deterring exports, Rahardi retorted: "Should I then implement the fourth scenario?"

The fourth scenario meant banning exports, he added.

The government prohibited the exports of all palm oil products in the first four months of this year to contain the soaring price of cooking oil in the country.

In April, the government lifted the export ban and imposed new export taxes of up to 40 percent for CPO and its derivatives, in compliance with the terms set by the International Monetary Fund.

The minister also denied recent press reports that the government was paying international prices for CPO it purchased from three local private companies to be sold domestically to help stabilize the soaring prices of cooking oil.

The chairman of the Indonesian Palm Oil Producers Association, Derom Bangun, expressed his concerned that oil palm plantation farmers would be the ones to suffer the most losses from the implementation of the new tax.

"The export tax rise would drive CPO prices down in the country, but the price of oil palm fruit sold by these farmers to the processing plants would automatically be lower," Derom told reporters after yesterday's announcement.

Farmers and small plantation holders produce about 30 percent of the oil palm fruits in the country, he said.

They number in the hundreds of thousands, and are predominantly located in North Sumatra, Riau and Jambi provinces. (das)