Govt mulls raising export tax on crude palm oil
JAKARTA (JP): The government is mulling raising export tax on crude palm oil (CPO) amid worries that the recent fall in the rupiah would cause a wave of CPO exports and an increase in the CPO price on the domestic market.
Minister of Industry and Trade Luhut Pandjaitan said on Thursday the plan was aimed at ensuring the availability of CPO on the domestic market and thus "helping develop the country's palm oil processing industries."
"We expect to decide on the increase in export tax within a month," Luhut said told reporters.
Luhut said there was no plan to raise export tax on oil by- products, which now stands at one percent.
The plan has yet to be approved by Minister of Finance Prijadi Praptosuhardjo.
Analysts said the government was worried that the recent fall in the rupiah would cause a wave of CPO exports and a shortage of CPO on the domestic market.
The shortage of CPO on the domestic market would lead to an increase in the domestic price for CPO and, in turn, cause a rise in the price of cooking oil, a sensitive commodity in the country.
Yet, the plan surprised local producers, who apparently have yet to be informed of it.
"I am really surprised at the plan as the government only recently cut the CPO export tax to three percent," chairman of the Indonesia Palm Oil Producers (GAPKI) Derom Bangun told The Jakarta Post.
The government decided on March 1 to cut the export tax from five percent to three percent to boost the competitiveness of the country's products on the world market.
As a matter of fact, some CPO producers argued that the three percent export tax was still too big compared with Malaysia's, where CPO producers pay no taxes to export their product.
Indonesia is the second largest palm oil producer after Malaysia with the output of 6.5 million tons last year.
Derom called on the government to review the plan, saying the policy would only help palm oil processors in maintaining their profits at the expense of CPO producers.
"Please, don't sacrifice CPO farmers and producers only to please processors," he said.
He said there was no strong reason for the government to raise the export tax for the moment given the fact that the price for CPO on the international market remained relatively stable.
The recent decrease in the rupiah value would also not result in a wave of CPO exports, Derom added.
The rupiah hit the psychological mark of 10,000 against the dollar last week and further dropped to 11,500 during midday trading on Monday on concerns over worsening social and political situations. The rupiah closed at 10,060 on Thursday. (03/jsk)