Govt to lift CPO export ban this month: Minister

JAKARTA (JP): The government plans to lift the export ban on crude palm oil (CPO) and its derivatives and replace it with export taxes and quotas later this month, a minister said on Thursday.

Minister of Forestry and Plantations Sumahadi said the ban would be replaced by export taxes and possibly quotas to ensure an affordable price and adequate supply of cooking oil on the domestic market.

Sumahadi said that his ministry and the Ministry of Industry and Trade were together finalizing plans to lift the ban, but he declined to give further details.

"We are still working it out. The ruling will be finished as soon as possible. CPO producers will be allowed to export their products but they will first be required to satiate domestic demand. Insya Allah (God willing) it will be lifted later this month," he said after meeting forest concessionaires and plantation company executives.

He said CPO export taxes, to be imposed after the ban is lifted, would be set at a reasonable level and would reduce the gap between world CPO prices and those found on the domestic market.

He said the price of CPO and its derivatives was currently higher on the world market than on the domestic market. This anomaly has prompted producers to illicitly export their products.

According to the Indonesian Palm Oil Producers Association, CPO currently sells for US$650 per ton on the world market and US$250 per ton on the domestic market.

The government banned the export of CPO, olein and other CPO derivatives last December in order to stabilize the price and ensure the domestic supply of cooking oil.

However, the measure artificially restricted domestic cooking oil prices and prompted people to hoard the product in anticipation of an inevitable rise in price. A shortage in supplies resulted.

CPO producers are reportedly withholding their products so that they can benefit from overseas sales when exports once again become legal. Many retailers are also reportedly stockpiling cooking oil so that they can make gains when prices rise after the export ban is lifted.

Under an agreement reached with the International Monetary Fund (IMF) in January, the government promised to lift the ban this month, but later decided to postpone such a move indefinitely amid fears that palm oil producers would export most of their produce to cash in on soaring international prices.

Indonesia is the world's second largest CPO producer after Malaysia. Total output is projected to reach 5.9 million tons this year, only 3.5 million tons of which can be absorbed by the domestic market.

Sumahadi said that the ban helped to curb domestic prices, but had reduced the profitability palm oil operations in Indonesia.

"The export ban temporary helped to curb the price of cooking oil, but when production exceeds local demand we can do nothing but export it," he said. (gis)