Legislator calls for probe of alleged CPO smuggling

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)