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)