Government to monitor CPO price surge
Adianto P.Simamora, The Jakarta Post, Jakarta
The Ministry of Industry and Trade is closely watching the current surge in the price of crude palm oil (CPO) on the international market which may cause a rise in the price of cooking oil here.
CPO is a raw material for the production of cooking oil.
"We have formed a special team to monitor the development," Ferry Yahya, director of export for agriculture and mining products at the ministry told The Jakarta Post on Friday.
The CPO price on the international market has been on the rise during the past couple of months, surging to a three-year high of around US$415 per ton on Thursday from $350 in April.
This price development could prompt local CPO producers to export most of their products, thus creating a scarcity at home, which, in turn, would push up the price of cooking oil, considered as a basic commodity to many Indonesians fond of fried foods.
Ferry said that the monitoring work of the special team was aimed at trying to avoid such a situation.
It's not yet clear what measures the government would take, but one option could be in the form of higher export taxes of CPO (currently at 3 percent) to help discourage the export of the commodity.
Such a move would be against the wishes of local CPO producers who have been calling for a lower export tax during the past several months.
Chairman of the Indonesian Palm Oil Producers Association (Gapki) Derom Bangun, however, demanded the government not to hastily increase the CPO export tax, saying the current level was already quite high.
He added that the higher international price would not lead to a scarcity at home as long as the local cooking oil firms bought CPO at its international price.
"Frankly speaking, I'm not worried about the supply shortage risk," he said.
Indonesia, the world's second largest palm oil producer after Malaysia, has a target to produce 7.2 million tons of CPO this year, up from 6.5 million tons in 2001.
The country's CPO exports are expected to reach 5.5 million tons in 2002 from 4.9 million last year, according to an estimate made earlier this year.