Indonesia Lacks Uniform CPO Price Benchmark, Says GAPKI

The Indonesian Palm Oil Association (GAPKI) has stated that Indonesia does not yet have a uniform price benchmark for crude palm oil (CPO), which poses a challenge in determining the fairness of export transactions. The association noted that this lack of a national benchmark makes it difficult to assess whether a transaction constitutes under-invoicing. GAPKI’s Head of Taxation and Fiscal Affairs, Yustinus Lambang Setyo Putro, said that the assessment of alleged under-invoicing in CPO exports cannot be based solely on price differences. He questioned which reference price should be used to determine if a transaction meets the arm’s length principle. Yustinus explained that although Indonesia launched a CPO exchange in 2023, it has not yet become the primary market reference because not many businesses have become active members. Meanwhile, the government still uses a reference price that combines several international indicators. He noted that the absence of a single Indonesian price standard leads to potential differences in interpretation between business actors and authorities regarding the reasonableness of a price. Yustinus added that export prices are also influenced by many variables, such as the type of product, ranging from CPO and kernel to various downstream products, each with different prices, HS Codes, and export duties. Furthermore, the terms of sales, such as Free on Board (FOB) at an Indonesian port versus Cost, Insurance and Freight (CIF) to destinations like Malaysia, India, or Europe, significantly affect the transaction price due to freight and insurance components.