CPO producers seek removal of export duty

Adianto P. Simamora, The Jakarta Post, Jakarta

Palm oil producers called on the government to remove the export duty on crude palm oil (CPO) in a bid to help boost the competitiveness of the commodity on the international market.

The Indonesian Palm Oil Producers' Association (Gapki) said that the association had sent a letter to the Ministry of Trade and Industry urging it to remove the prevailing three percent export duty on CPO.

Gapki chairman Derom Bangoen said on Monday that the export duty was introduced last year by the government to discourage CPO producers from exporting their products at a time when the price of cooking oil was at a record high.

CPO is the raw material used in the production of cooking oil, which is considered a strategic commodity in this country, where the people are partial to fried food.

"The price of cooking oil is relatively stable now, but the government is still maintaining the export duty on CPO," Derom told reporters on the sidelines of Gapki's annual meeting.

Many local exporters, said Derom, had complained that the export duty had affected the competitiveness of local CPO products on overseas markets.

"They (the exporters) can't lower the price of their CPO while competitors from Malaysia are offering lower prices. This has created difficulties for local exporters," he said.

He said the association would also make a formal request to the finance ministry to drop the export duty.

The government imposed the export duty on CPO amid fears that rising CPO prices on the international market could prompt local producers to export their palm oil.

If this happened, it could have led to a shortage at home and further pushed up the price of cooking oil.

Derom said that removing the export duty would also help increase the price of palm fresh fruit bunches, which in turn would encourage farmers and plantation firms to boost production.

"So far, the low price for fresh fruit bunches has discouraged growers and plantation firms from expanding their plantations," he said.

"How can we meet the government's export target of 10 million tons over the next five years if there's no expansion in the plantation area," he added.

Indonesia, the world's second largest palm oil producer after Malaysia, aims to export some 5.5 million tons this year, up from 4.9 million in 2001.