The Trade Ministry is in talks with the country's crude palm oil (CPO) producers over a revision to the current policy for the commodity's export duty.
"There are several options being discussed, including whether it will be set to the level of the range of the increase (of the duty) from time to time or on the price indicator," Trade Minister Mari Elka Pangestu said Friday.
The export duty on CPO is set every month.
She said the government, exporters and associations would calculate the effect of the revision on CPO exports, the state budget and domestic supply before implementing it.
The government issued in February a new progressive tariff on export duties which states that CPO priced between US$1,100 and $1,200 per ton will incure a duty of 15 percent.
The duty will increase to 20 percent for prices ranging between $1,200 and $1,300 per ton, and to 30 percent for prices exceeding $1,300 per ton.
Derom Bangun, executive chairman of the Indonesian Palm Oil Association (GAPKI), said the revision would likely adopt a progressive system.
"For example, the export duty settled at a minimum CPO price of $1,000. And if the price is above that figure, let's say $1,150, the higher duty should only be applied on the extra $150," he said.
The export duty for July has been set at 20 percent, up from 15 percent a month earlier, as the average international price of the commodity in June reached $1,144 per ton.
The export duty for a coming month is largely determined by the average price of CPO in the previous month.
According to the Central Statistics Agency, total CPO exports in May reached 1.8 million tons with a total value of $1.9 billion, up from 655,000 tons in April with a value of $690.1 million.
The increase was driven by a lower export tax in May of 15 percent compared to 20 percent in April.
GAPKI estimates the country will produce 18.4 million tons of CPO this year, 4 million tons of which will be sold domestically, to be used as a raw material for cooking oil, while 300,000 tons will be used to make biodiesel and the remaining 14 million will be exported.
Indonesia is currently the world's largest CPO producer.
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