CPO producers urge government to lift export ban

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)