Govt has no plan to remove CPO export tax: Minister

JAKARTA (JP): Minister of Trade and Industry Jusuf Kalla ruled out on Wednesday a plan to remove the export tax on crude palm oil (CPO) products.

"We won't remove the tax. It's still 10 percent," Kalla told The Jakarta Post on the sidelines of a meeting of the Consultative Group on Indonesia (CGI), the group of Indonesian creditors.

"But the effective (tax) level will be only 3 percent because prices are now low," he added, without giving details.

The government imposes the 10 percent CPO tax based on the government export reference price which can be modified every month. So if the government lowers the reference price, the effective tax level would go down.

There have been rumors circulating in the industry that the government was about to remove the 10 percent CPO export tax on grounds that domestic cooking oil prices have stabilized, and the fact that huge stocks have built up at home following the CPO contamination scandal.

The palm oil scandal relates to the rejection in Rotterdam in October of 85,000 metric tons of tainted CPO from Indonesia. The CPO was shipped from Belawan Port, North Sumatra's main gateway for CPO exports.

The tainted CPO is believed to be the result of thieves mixing diesel oil with the crude palm oil, thereby preventing authorities from detecting the theft of the CPO by the reduced volume.

Some of the tainted CPO has been returned to Belawan. As a result of the scandal, Indonesia CPO exports to Europe dropped drastically, causing stocks of the product to pile up in several production centers, according to the local palm oil federation.

The federation said that Indonesia's CPO stocks have reached between 400,000 and 500,000 tons, and the stocks will continue to increase because the market is already oversupplied.

The federation is reported to have sent a proposal to the government to remove the CPO export tax.

The tax was last modified in July when the tax on crude palm oil was cut to 10 percent from 30 percent in a bid to boost exports.

The tax on CPO derivative products was also revised. The tax on refined bleached deodorized (RBD) palm oil and RBD palm olein was cut to 8 percent, crude palm olein also to 8 percent, and crude palm kernel to zero percent. (rei)