Goverment urged to drop taxes on CPO, oleins
Goverment urged to drop taxes on CPO, oleins
JAKARTA (JP): The Federation of Edible Oil and Fats
Associations yesterday called on the government to drop export
taxes on crude palm oil (CPO) and oleins -- CPO products for
cooking oil production -- to regain Indonesia's stake in overseas
markets.
The chairman of the federation, Sawarno, told a hearing with
the Trade and Logistics Commission of the House of
Representatives that the introduction of the export taxes has
caused Indonesia to lose its market shares on the world market,
particularly in European and Middle East countries.
"We are already having difficulties in reentering European and
Middle East markets ... And I'm afraid, in the future, Indonesia
will lose more of its market shares," Sawarno said.
The government introduced the export taxes on CPO and oleins
last September to protect local producers of cooking oils and
stabilize their domestic prices.
When the government introduced the taxes, CPO prices on the
world market reached its highest point since 1984 to US$700 per
ton.
"However, the prices on the world market have fallen to $600
per ton. And I believe it will continue to drop in the future and
such taxes, therefore, will not be necessary anymore," Sawarno
said.
He argued that the prices of agricultural commodities,
including CPO, widely fluctuate on the world market and,
therefore, he suggested that the government not worry about price
changes.
Meanwhile, Moh. Nafis Daulay, chairman of the Association of
Cooking Oil Producers, said that the introduction of progressive
tax rates on CPO exports may discourage new investments in CPO
production.
The government is currently engaged in an intensive campaign
to encourage investors to open palm oil plantations in a bid to
increase annual CPO production to around seven million tons by
year 2000 from around four million tons at present.
Trust
Nafis explained that the export taxes have also diminished
foreign buyers' trust in Indonesia's exporters because the latter
cannot ensure stable supplies.
"They might have turned to Malaysia's exporters, which are
becoming more powerful on the world market," Nafis said.
Malaysia produces some seven million tons of CPO annually,
controlling almost 60 percent of the world's output.
Nafis noted that the government has failed to protect local
producers because the current export taxes are encouraging people
to export CPO because the tax rate on it is much lower than that
on oleins.
He also questioned the government's effort to stabilize
domestic cooking oil prices by imposing export taxes, saying that
the government should better liberalize trade so that there is no
significant difference between domestic and overseas prices.
The government-run semi-buffer stock agency Bulog has
targeted to maintain the price of cooking oil at Rp 1,300 ($59
U.S. cents) per kilogram.
Operation
Bulog, which has bought 150,000 tons of CPO and sent it to
Salim Group's and Sinar Mas' processing plants, has been using
the additional cooking oil products for market operations to
stabilize domestic prices during the New Year and the fasting
month.
Meanwhile, Wulani W. Rismono of Hasil Group, which produces
cooking oil under the Vetco brand, noted that the current surge
of cooking oil prices, reaching between Rp 1,800 and Rp 2,000 per
liter, is the psychological effect of the fasting month.
She said cooking oil prices from the plants remain the same --
at between Rp 1,300 and Rp 1,400 per liter.
"It must be the retailers who get the largest portion of
profits," she said. "However, it must be kept in mind that there
are losses of about 20 percent of cooking oil sent from factories
to retailers due to technical reasons." (rid)