Govt set to impose new tax on CPO product shipments

JAKARTA (JP): The government plans to impose a tax on the interisland shipment of crude palm oil (CPO) and its by-products in an attempt to curb smuggling activities.

Minister of Forestry and Plantations Sumahadi said the tax would be introduced to prevent CPO products from being exported illicitly to other countries.

"God willing, the Minister of Industry and Trade will issue the decree on the tax later this week," Sumahadi said in a news conference yesterday.

Sumahadi said that concerns about CPO smuggling had grown following the government's recent decision to impose export taxes of up to 40 percent on CPO and its by-products after an export ban was lifted last month.

He said there had been numerous reports of Indonesian CPO being smuggled out of the country to avoid the export taxes.

According to the minister, several CPO producers allegedly abused their interisland transport licenses, using them to legitimize shipments which were in fact destined for foreign ports, thereby avoiding the export tax.

He said the proposed interisland tax would be held as a deposit to ensure that CPO producers would not try to cheat the government. The tax would be reimbursed after producers submitted value-added tax invoices from sales, which would prove that they had sold their produce on the domestic market, he added.

"The money will not be absorbed into the state budget. It is only a deposit. The money will be repaid to CPO producers after they submit value-added tax invoices," Sumahadi said.

But he added the government would retain the money if CPO producers were found guilty of illegally exporting CPO products.

Sumahadi also reiterated his assurance that the country's three state cooking oil producers would continue to receive a supply of CPO from state plantation companies yesterday.

In a directive issued on Monday, Sumahadi stated that the state plantation companies, PT Perkebunan Nusantara I to XIV, would continue to provide a total of 39,200 tons of CPO each month to state cooking oil producers.

The three cooking oil producers were earlier reported to have been excluded from a new list of producers supplied with CPO by the state-owned plantation companies.

Indonesia is the world's second largest producer of CPO after Malaysia. The country's total production of CPO is expected to reach 5.9 million tons this year. Only 3.5 million tons are required to meet domestic demand. (gis)