Minister seeks RI palm oil investment stoppage

Minister seeks RI palm oil investment stoppage

SINGAPORE (Reuters): Indonesian Environment Minister Sarwono Kusumaatmadja said on Tuesday he would propose a moratorium on new investments in the country's palm oil sector.

Indonesian authorities blamed plantation companies which indiscriminately cleared land for planting for the brush and forest fires that spewed a choking smog across much of Southeast Asia for weeks earlier this year.

"There was this stress on quantity that drove the investors to clear land out of proportion to what we really need," he told reporters after a meeting of the Association of Southeast Asian Nations (ASEAN) meeting on the smog problem.

"And that's the one that triggered the haze problem," he said. "The drive was really not needed. If we concentrate on quality, then the whole problem will be more manageable."

"Currently there is no freeze on investments in the palm oil sector, but I am going to recommend a moratorium on new investments," Sarwono said.

Indonesia is the world's largest producer of crude palm oil after neighboring Malaysia.

Both are members of ASEAN along with Brunei, Myanmar, Laos, the Philippines, Singapore, Thailand and Vietnam.

Trade

Meawnhile, Indonesian palm olein prices were generally stable in late trading on Tuesday, with producers set to meet government officials over the imposition of additional export taxes on palm oil, Indonesian traders in Singapore said.

Palm olein was quoted at Rp 2,275-2,300/kg in Jakarta.

"Some players raised offers to Rp 2,300 because of the rupiah's weakening against the U.S. dollar," one trader said.

Traders also said representatives from 17 groups of companies allowed to export palm oil were scheduled to meet officials from the Industry and Trade Ministry on Wednesday.

"We received a notification from the ministry asking us to attend the meeting," one trader said. "The meeting is about the additional export tax, but there were no further details."

Industry and Trade Minister Tunky Ariwibowo said last week an additional export tax of between 28 and 30 percent would be imposed on producers who fail to supply 80 percent of their production to the local market.

Crude palm oil is now subject to an export tax of five percent, palm olein two percent, and crude olein and RBD palm oil four percent each.

"I don't expect any major changes to the tax structure as announced by the minister," one trader said. "But there have been plenty of rumours in the market over the meeting."

The additional export tax, which became effective on Dec. 19, is aimed at boosting domestic supply and keeping prices under control at least until the March presidential polls.