Gapki demands zero tax for Russia-bound CPO
M. Taufiqurrahman, The Jakarta Post, Jakarta
The Indonesian Palm Oil Producers Association (Gapki) demanded on Friday that palm oil products to be exported to Russia under a countertrade agreement be exempted from taxes.
Gapki chairman Derom Bangun said that tax exemptions would help producers offer a competitive price to the State Logistics Agency (Bulog), which would deliver the products to Russia.
Under the countertrade deal, signed by President Megawati Soekarnoputri during a recent visit to Russia, Indonesia will get Sukhoi Su-27 and Su-30 jet fighters and Mi-35 helicopters from Russia in return for Indonesian commodities.
To meet the US$192 million deal, Gapki is set to deliver about 300,000 metric tons of palm oil products valued at $108.5 million to Russia until next year. Palm oil products will make up 65 percent of all commodities to be traded with Russia.
"The zero taxation must be imposed on palm oil products shipped to Russia, otherwise our exporters would bear more costs for their supply," he said, adding that the current taxes were 3 percent for crude palm oil and 1 percent for its derivative products.
Derom said that should the tax be reduced or abolished, producers here could lower the price of palm oil to be shipped to Russia.
He also complained that Bulog, which would act as the sole purchaser of palm oil products from local suppliers, set a number of restrictive requirements, which would limit companies eligible to provide products to it.
"There are requirements that may hinder small producers from taking part in the countertrade deal, such as the obligation to have accounts in a certain bank or to give a guarantee if their products are denied by Russia," he said, on the sideline of an extraordinary meeting of Gapki here.
With the coordination from Bulog, the association is expected to preliminary ship 42,000 metric tons of palm oil products to Russia in June. By the end of this year, Gapki will send a total of 100,000 metric tons, while the delivery of another 200,000 metric tons will be completed in 2004.
Indonesia is the world's second-largest palm oil producer after Malaysia. In 2002, Indonesia exported 6.34 million metric tons of palm oil products valued at $2.1 billion.