Government plans to cut export tax of CPO products

JAKARTA (JP): The government will further lower the export tax of crude palm oil and its by-products to follow a downward trend of the commodity price overseas, Minister of Industry and Trade Rahardi Ramelan has said.

"I will send a recommendation to lower the export tax to the finance minister on Monday," he told Bisnis Indonesia on Friday.

Rahardi said that the government would also cut the reference price of CPO products in conformity with the downward direction of prices overseas.

The reference price is used as the base to calculate the export tax.

On Feb. 1, the government cut export taxes on CPO and some of its by-products from 60 percent to as much as 40 percent in a bid to boost exports.

The new reference price is set at US$535 per metric ton for CPO and $580 per metric ton for refined bleached deodorized palm olein or cooking oil.

Director General of International Trade Djoko Moeljono said the current 40 percent export tax should be adjusted to market trends.

If the export tax is maintained at the current level, it would discourage palm oil producers from exporting their commodity, because with current price levels, selling the commodity overseas is no longer attractive, he said.

"The export tax and reference prices should be adjusted to the present market condition, but we haven't decided yet."

Meanwhile, the chairman of the Federation of Indonesian Palm Oil Producers, Derom Bangun, said that the export tax should be reviewed because it was already too high.

With the high export tax, CPO producers would also prefer to sell their products at home and this would lead to oversupply in the domestic market.

"As a result, prices at home would continue to decline," he said.

A reasonable export tax, he added, is between 20 percent and 30 percent, while reference prices should be lowered to between $465 and $470 per ton. (gis)