Curb measure on CPO export explained

Curb measure on CPO export explained

JAKARTA (JP): The government announced yesterday full details
of its new measure to curb exports of palm oil and related
products, in a bid to stabilize the commodity's local prices.

Under a Ministry of Industry and Trade decree, which goes into
effect today, the government appointed 17 groups, owners of 214
oil palm plantation companies and all olein refineries in the
country, to supply the local demand for crude palm oil (CPO) and
olein.

The 17 groups include the Salim Group, which owns 12 crude
palm oil mills, PT Bukit Kapur Reksa and Group, PT Smart Corp and
Group, PT Musim Mas and Group, Raja Garuda Mas and Group, Astra
AGRO Lestari, and the joint marketing division of state-owned
PTPN.

The remaining 10 companies are Tunas Baru Lampung and Group,
the Lonsum Group, Socfindo, Dutapalma Nusantara, Sipef and Tolan
Tiga, Permata Hijau Sawit and Tasik Raja, the Tidar Group, GAPKI
and AIMI, Hasil Karsa and Group, and PT Bintang Era Sinar Tama
and Group.

Minister of Industry and Trade Tunky Ariwibowo said yesterday
the decree, which would be effective for the next six months,
required the 17 companies to sell 80 percent of their total
production locally.

This would total about 2.3 million tons of CPO and 1.86
million tons of olein, he said.

The companies were free to export the remaining 20 percent of
their product, he said.

"We expect that the production volume allocated for the
domestic market by the 17 groups will supply local demand for the
next six months," he said.

He said a sufficient amount of the commodity would curb the
much expected price hike of cooking oil, especially around the
Islamic Ramadhan season in January.

Tunky said companies, other than the 17 groups, were not
obligated to allocate their products for the domestic market.

However, the companies would be imposed a new tax, in addition
to the 4 percent to 5 percent existing export tax, if they
exported over 20 percent of their products, he said.

The new tax, which also comes into effect today, is 30 percent
for CPO, refined bleached deodorized (RBD) palm oil and crude
olein. The government also imposes a 28 percent surcharge on
refined bleached deodorized olein.

The government now charges a 5 percent export tax on CPO, RBD
palm oil and RBD olein, and a 4 percent export tax on crude
olein.

Tunky said those which allocate 80 percent of their products
to the local market would be exempt from the export tax.

Those companies could export their products themselves or
through one of the 17 groups, he added.

The new export measure will limit Salim Group's CPO exports in
the next six months to about 31,995 tons, out of a total
production of 159,974 tons, and its olein to 13,793 tons out of
68,967 tons.

Smart Corp's exports will also be curbed to 50,804 tons of CPO
and 26,375 tons of olein, while those of Musim Mas to 42,988 tons
of CPO and 90,284 tons of olein, and those of Bukit Kapur to
54,312 tons of CPO and 75,749 tons of olein.

Raja Garuda's exports will be also limited to 27,356 tons of
CPO and 14,098 tons of olein, while those of PTPN will be cut to
145,712 tons of CPO and 15,047 tons of olein.

Astra's exports will be lowered to 23,448 tons of CPO and
2,652 tons of olein under the new export quota.

Asked whether the new tax would help curb the commodity's
exports, Tunky said the companies would likely profit more from
trading in the domestic market than having to pay the export
surcharge.

"But we'll have to wait until the law is fully implemented to
see if it works."

The government could not stop companies from exporting, he
said, adding: "This is just to discourage them, we are not
halting export activities." (das)