Legislator calls for probe of alleged CPO smuggling
JAKARTA (JP): Legislator Priyo Budi Santoso urged the government yesterday to probe a major palm oil producer, the PT Bukit Kapur Reksa Group, for allegedly smuggling crude palm oil (CPO) and its byproducts.
Priyo, who sits on the House of Representatives Commission V (for industry, mining, trade, manpower) said he had received reports from palm oil producers indicating that Bukit Kapur Reksa (BKR) and its subsidiaries may have smuggled hundreds of thousands of tons of olein, the refined form of CPO, in 1997 and this year.
"Other companies may also have smuggled the commodity but the government can probe this company as a starting point," the Golkar legislator told reporters at a discussion organized by the Association of Economics Journalists.
Priyo said he strongly believed smuggling had been on the rise due to the big difference between the country's controlled domestic prices and international prices, especially after the rupiah's collapse over the last year.
Minister of Industry and Trade Rahardi Ramelan promised Tuesday to investigate the possible smuggling of palm oil and its derivatives in a bid to secure a sufficient domestic supply of cooking oil.
In an effort to slow down the export of CPO, the government has raised export taxes for the commodity -- the main raw material for the production of cooking oil -- to 60 percent from 40 percent. Domestic CPO supply, however, has remained low despite the high export tax, pushing up cooking oil prices to between Rp 5,000 and Rp 6,000 per kilogram -- far above the government's reference price of Rp 4,000 per kilogram.
Priyo said that according to his data, the volume of BKR's olein exports originating from Riau's Dumai Port recorded at overseas ports of destinations was much higher than those recorded in Dumai.
The Dumai trade office recorded BKR's exports of olein at only 2,417 tons in the first half of the year, but data at various ports of destinations, collected by surveyor company Inchcape Testing Services of Malaysia, put BKR's total export shipment at 48,346 tons over the same period.
That means almost 46,000 tons of olein shipped overseas by BKR through Dumai Port were not recorded in the Dumai trade office, he said.
Inchcape is a Malaysian surveyor company hired by international buyers to collect data on CPO and olein trade and shipment for market analysis.
"If the export shipments were legal, they should have been recorded at the Dumai trade office because the exporters had to obtain certificates of origin from the office," Inchcape's report said.
BKR's export figures for 1997 also raised questions since its olein exports recorded at the Dumai trade office totaled only 3,199 tons.
However, Inchcape's data gathered at ports of destinations in Asia and Europe put BKR's olein exports for that year at a total of 310,900 tons -- more than 307,000 tons over the volume recorded by the Dumai trade office.
Priyo believed the company may have colluded with Dumai Port officials, tax and excise officials and industry and trade officials.
"The government should also probe these people," he said.
Priyo did not rule out the likelihood that the company could have smuggled the commodity by transferring loads to other ships at sea.
BKR and its subsidiaries -- PT Karya Prajona Nelayan, PT Sinar Alam Permai and PT Multimas Nabati Asahan -- own palm oil refineries in Dumai, Kuala Tanjung in North Sumatra and Palembang in South Sumatra with a combined capacity of 6,000 tons per day.
Another speaker at the discussion, Tarmidzi Rangkuti, the deputy chairman of the Indonesian Vegetable Oil and Fat Association (Famni), agreed that the smuggling of CPO and its by- products had been on the rise following the rupiah's collapse. He did not comment on Priyo's suspicion toward BKR, however.
"Pak Priyo's allegations about rampant smuggling is not nonsense," Tarmidzi said.
Derom Bangun, vice chairman of the Association of Indonesian Palm Oil Producers (Gapki), had earlier called on the government to probe possible smuggling. (jsk)