Govt may cut CPO export tax to 40% in January

Govt may cut CPO export tax to 40% in January

JAKARTA (JP): The government will slash the export tax on
crude palm oil (CPO) from 60 percent to no lower than 40 percent
by the end of January, Industry and Trade Minister Rahardi
Ramelan said on Thursday.

Rahardi said his ministry had determined the new export taxes
for CPO and its byproducts and would soon recommend that the
Finance Ministry initiate the tax cut after the Muslim Idul Fitri
holiday, which will fall on Jan. 19 and 20.

"It will be between 40 and 60 percent, but it can't be lower
than 40 percent," he told a press briefing, declining to cite a
specific figure.

Meanwhile, Forestry and Plantations Minister Muslimin Nasution
said on Thursday the high export taxes on CPO and its byproducts
had halved the incomes of oil palm farmers as demands for the oil
palm kernels had sharply dropped.

The price of oil palm kernels fell from Rp 700 to Rp 350 a
kilogram after the government raised the export tax from 40
percent to 60 percent in July, last year.

The high export tax had discouraged CPO producers from
exporting and caused the total supply of the commodity to flood
the local market, especially after the rise in the rupiah's value
to between Rp 7,500 and Rp 10,000 to the greenback in September.

"I have requested the Industry and Trade Minister to lower the
export taxes after Idul Fitri," he said.

Besides the 60 percent tax on CPO, crude palm olein and oil
palm kernel, the government imposes a 55 percent tax on refined
bleached deodorized (RBD) olein and RBD palm oil, with 25 percent
on crude stearin, and 20 percent on RBD stearin.

It also imposes a 50 percent tax on crude palm kernel oil, 45
percent on RBD palm kernel oil, 20 percent on crude coconut oil
and 15 percent on RBD coconut oil.

In Thursday's yearend press briefing, Rahardi said the
government would also next month announce its new automotive
policy.

He said that the current policy in which the fiscal incentives
are based on the proportion of local components used in car
production would be changed to meet the requirements of the World
Trade Organization's free trade pact.

The government would not likely maintain fiscal incentives
through lower import duties and luxury taxes beginning next July,
when the World Trade Organization's sanctions on Indonesia's car
industry take effect, he said.

"Incentives will probably be in the form of design and
technological assistance, and no longer through fiscal measures,"
he said.

Earlier this month, the WTO decided that Indonesia must
abolish the country's existing policy on the automotive sector,
which offers lower import tariffs for producers of cars with a
high local components content.

The measure must be abolished by July 23, 1999, a year earlier
than the planned 2000, due to the prior move by the government to
give PT Timor Putra Nasional, a carmaker belonging to a son of
former president Soeharto, preferential treatment in developing
the so-called "national car project". (das/gis)