Export tax helps cater to industry: VP

Rendi A. Witular, The Jakarta Post/Jakarta

Amid rising criticism from many businesspeople about recent plans to impose more export duties on coal and crude palm oil (CPO), the government is optimistic that the policy will help develop the local processing industry.

Vice President Jusuf Kalla said that aside from contributing to state revenues, the planned export duties would also encourage coal and CPO producers to sell their products to local companies.

"If all the coal and CPO are exported, the processing industry for the two products will be hurt. Eventually, there will be no incentives for the downstream sector," Kalla told reporters after Friday prayers.

The government recently announced plans to impose a 5 percent export duty on coal only if the commodity's price rises to between US$50 and $55 a ton. At present, free-on-board (FOB) prices for coal hovers at around $40 a ton.

Indonesia, which produced some 131 million tons of coal last year, exports some 70 percent of its coal to Japan, Taiwan, South Korea, India and China.

Amid rising global coal prices, coal producers have forecast the country's coal output to increase by 19 percent to 155 million tons this year and 12 percent to 175 million tons next year.

The government is also planning to impose a 3 percent export duty on CPO. However, the policy has not yet been exercised because the government is still preparing to revise the minimum export price for the product.

At present, the minimum price is set at $160 per ton with an international price currently at $420 per ton.

Kalla said the government would only impose the export duty if the prices of the two products on the international market were deemed too high and contained a high degree of return for the producers.

"The duty will be imposed if the prices are good for the producer, but the level of the duty is still far from the government expectation," he said.