CPO producer asks for lower olein export tax
CPO producer asks for lower olein export tax
JAKARTA (JP): The government should lower the 11 percent
export tax on olein to strengthen the crude palm oil (CPO)
refining industry and increase the export of high value-added
CPO-based products, an executive said on Monday.
Surya, the executive director of PT Musim Mas, a major CPO and
cooking oil producer in North Sumatra, said during a meeting with
the provincial legislature in Medan that the high export tax on
olein encouraged the export of raw palm oil.
"Since CPO is subject to only a 3 percent export tax,
producers prefer exporting this unrefined commodity, whose price
is much lower than olein," Surya was quoted by Antara news agency
as saying.
Indonesia, according to Surya, should follow the Malaysian
policy of keeping the export taxes on olein and CPO at almost
similar levels.
He said Malaysia designed its export tax policy to stimulate
the growth of its CPO refining industry in order to produce a
wider variety of higher value-added goods.
"Supported by this policy, Malaysia has succeeded in
dominating the olein market in major importing countries such as
India," he added.
He said the high export tax had made Indonesian olein less
competitive than the Malaysian product.
"Nobody will be hurt if the Indonesian government lowers the
export tax on olein. Such a measure will instead boost the
refining industry, increase the procurement price of CPO from
smallholders and generate larger foreign exchange earnings from
exports," Surya said.
According to Surya, Indonesia, which produces approximately
six million metric tons of CPO a year, exports mostly unrefined
palm oil, notably to India.
India alone imports about two million tons from Indonesia, but
this consists almost entirely of CPO, while the Indian olein
market is dominated by Malaysia, he said.
"Indonesian olein cannot compete with Malaysian olein in the
Indian market due to the high export tax, as India also imposes a
27 percent import tariff on olein," Surya said.
It is therefore imperative that the government cut the export
tax on olein, Surya added.