Govt to lift CPO export ban this month: Minister

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)