CPO producers urge government to lift export ban
JAKARTA (JP): The Indonesian Palm Oil Producers Association has said the new agreement between the International Monetary Fund and the government, to be signed this week, should include the revoking of the export ban on crude palm oil (CPO) and most of its derivatives.
The association's chairman, Derom Bangun, said Saturday that the export ban on CPO and its derivatives over the past three months had caused the country to miss out on huge foreign exchange revenue.
Therefore, he said, the association urged the government and the IMF, which are currently renegotiating a reform program in exchange for a multibillion dollar bailout package, to lift the ban soon.
"All palm oil producers are anxiously waiting for the result of the current meeting between IMF and the government," Derom told The Jakarta Post.
An IMF team and the government are currently holding talks on economic reforms the country should adopt in return for a new loan package from the fund.
Indonesia banned the export of CPO and most of its derivatives in January to stabilize domestic prices which had soared because of the tumbling rupiah.
Under the January agreement with the IMF, the government promised to lift the ban this month, but later back tracked for fear that palm oil producers would export most of their products to cash in on the soaring international prices.
CPO at present sells at US$650 per ton on the world market against $250 per ton on the domestic market.
Derom said the country's CPO production was projected to increase by 11.32 percent to 5.9 million tons this year, of which only 3.5 million could be absorbed by the domestic market.
He said the export of the remaining 2.8 million tons could generate a revenue of $1.2 billion.
Derom said his association had recently proposed that the government devise an alternative scheme to the export ban.
He suggested that under the scheme, palm oil producers be allowed to export 25 percent of their CPO and 50 percent of their olein and refined bleached deodorized (RBD) product and sell the remainder domestically to help stabilize prices.
Palm oil producers were obliged to pay export taxes of between 12 percent and 18 percent for CPO, olein and RBD.
"The export tax should be reduced to lure palm oil investors. In Malaysia, the export tax is only between 14 percent and 16 percent," he said.
According to Derom, the association also proposed that the government maintain the tax exemption on stearin exports to add to palm oil producers' revenues.
"We made the proposal because we heard the government planned to impose export tax on stearin," Derom said.
The government earlier banned the export of stearin until Feb. 28, after which it allowed palm oil producers to export 60 percent of their stearin exempt from tax.
Stearin -- a byproduct of CPO -- is used by bakers and chocolate makers.
According to Derom, one kilogram of CPO produces 720 grams of olein, 220 grams of stearin and 40 grams of fatty acid.
State Logistics Agency chairman Beddu Amang suggested on Thursday that tax on crude palm oil exports should be 60 percent after the export ban was lifted. He did not elaborate.
Some traders said such a rate would be too high, adding that the tax should be between 40 percent and 50 percent.
Rumors that the export ban would be soon lifted pushed up domestic prices of olein, according to traders.
Sources said that Minister of Industry and Trade Mohamad "Bob" Hasan was upset about the increasing prices of palm oil and he was likely to maintain the export ban for some time. (jsk)