Govt mulls increasing export duty on CPO

The Jakarta Post, Jakarta

The government warned that it might raise the export duty on crude palm oil (CPO), the raw material for cooking oil, to ensure stable cooking oil prices during the upcoming festive season.

Minister of Industry and Trade Rini M.S. Suwandi said an increase in export duty would help curb the export of the commodity and thus ensure its availability to local cooking oil producers.

This would in turn ensure stable cooking oil prices during the Lebaran Islamic holiday and Christmas.

Rini noted, however, that the government would not raise the duty if local CPO producers agreed to ensure sufficient supplies for local producers. But, conversely, if the CPO producers could not guarantee supplies, the government would raise the export duty.

"We will soon hold a meeting with CPO producers to discuss this issue," Rini said.

She did not, however, say how much the increase would be. The government currently imposes a three percent tax on CPO exports, and a one percent tax on refined, bleached and deodorized palm olein exports.

Coming second after Malaysia among the largest CPO producers in the world, Indonesia has targeted the production of some nine million tons this year, up from last year's 8.3 million tons. Of the total output, some 5.5 million tons are destined for export.

Cooking oil is deemed a strategic commodity in the country, and the government always seeks to keep its price affordable. Demand for cooking oil normally rises prior to major religious holidays, such as Ramadhan, Christmas, the New Year, and the Chinese Lunar New Year.

CPO producers have been boosting exports over the past several months following a significant increase in the international price of the commodity.

The price has been hovering at above US$400 per ton over the past several months, while analysts predict the price will further rise to $500 per ton next year.