Government will scrap CPO export taxes: Official

Government will scrap CPO export taxes: Official

JAKARTA (JP): The government will soon remove export taxes on
crude palm oil (CPO) and its by-products from the current 10
percent, a senior official said on Friday.

Director General of International Trade Djoko Moeljono said
they would be lifted to comply with a persistent drop in CPO
prices on the international market.

CPO prices fell from US$469 in late April to $365 in early
July, and are $237 at present.

"But I don't know exactly when removal of the export taxes
will take place ... but for sure it will be very soon as there
are no signs that CPO prices will pick up again," he said.

Export taxes on CPO and its by-products were lowered to a
maximum 10 percent early this month. They had been at 40 percent
since February.

On Friday, the ministry cut the reference prices used to
calculate the payment of export taxes on crude palm oil (CPO) and
its by-products by up to 54 percent.

The new reference price for CPO is $120 per metric ton from
$260 per metric ton. The reference price of oil palm kernel was
cut to $25 per ton from $55 per ton, refined bleached deodorized
(RBD) palm oil is $140 per ton from $270 per ton, crude palm
olein is $150 per ton from $210 per ton and RBD palm olein is
$165 from $230 per ton.

The government discontinued reference prices for other CPO
products since it already imposes zero export taxes on them.

Djoko said slashing the reference prices was a "shortcut" to
help exporters boost CPO exports and increase farmers' income.

"Lowering CPO reference prices by over 50 percent is equal to
reducing its export taxes to 5 percent. It will help both
exporters and farmers while waiting for the removal," Djoko said.

The new reference prices are effective from July 30 to Aug.
31.

Djoko said that with current export taxes of 10 percent and
the old reference prices, CPO exporters would have suffered a
loss of Rp 100 for each kilogram of CPO they exported.

"With new base prices, exporters will earn a profit on their
CPO exports, albeit still a small one," he said.

He said the basic export price would serve to stabilize the
local supply of palm oil products until the removal of the export
taxes.

He added that the government would continue to monitor CPO
prices on local and international markets and make further
adjustments to export taxes and the reference prices.

The continued fall in international price of CPO and its by-
products and the strengthened rupiah to U.S. dollar has made
exporting unattractive and caused a glut in domestic supply, he
said.

Indonesia, the world's second biggest producer of CPO, slapped
the tax on CPO and its derivatives after the rupiah nose-dived at
the onset of the financial crisis in July 1997, which made
exports much more profitable than domestic sales and led to
staggering shortages of cooking oil.

Minister of Forestry and Plantations Muslimin Nasution earlier
proposed the removal of the export taxes.

Djoko said that his ministry was currently involved in talks
with its counterparts from Malaysia, the world's largest CPO
producer, on how to cooperate to prop up prices of CPO on
international markets.

"The Malaysian government as well as the Indonesian government
are now seeking the possibility of cooperating to stabilize
prices of CPO," he said.

Djoko said other edible oil producers had asked Malaysia and
Indonesia to pioneer the cooperation. (gis)