No changes in CPO export duty, yet

No changes in CPO export duty, yet

The Jakarta Post, Jakarta

The crude palm oil (CPO) trade, which has been disrupted over the
past few days amid uncertainty regarded the commodity's export
base price and applicable duty, is set to return to normal after
the government decided on Wednesday not to make any changes.

A new regulation issued by Ministry of Trade states that no
changes will be made to the existing export duty and base price
until further notice.

The current CPO export base price is set at US$160 per metric
ton and export duty at 3 percent.

The tariff is adjustable once a month, but as CPO producers
had previously been waiting for a new ruling, buyers had
reportedly been holding back from making purchases for the past
several days.

"Stocks of 200,000 tons piled up this week," said Indonesian
Palm Oil Producers Association chairman Derom Bangun.

In compliance with a presidential regulation signed last month
on the tariff-setting mechanism, the government had planned to
base the CPO export price on the international market price of
about $420 per ton.

The association, however, proposed that if there should be a
rise in the base price, the government should lower the export
duty to 1.5 percent instead of the current 3 percent.

The adjustable price-setting mechanism is aimed at gradually
reducing the price margin between the local and global markets,
thus helping secure the supply of CPO for domestic manufacturers.

Palm oil is the raw material for, among other things, cooking
oil, soap and detergent.

CPO exporters have been opposing a rise in the base price,
saying that they had already been hit hard by the recent fuel
price hikes, which had in turn pushed up their production costs.

CPO producer and exporter Austindo Nusantara Jaya Agri (ANJ
Agri)'s CEO Wim Iskandar said that with the increased burden of
higher fuel prices, the company's transportation costs had
increased by 50 percent.

The company, which expects to produce 411,000 tons of CPO this
year, said that if there was a rise in the export duty, it would
have to cut the price it paid to growers from Rp 650 to Rp 600
per kilogram.

This year, with a trend toward increasing use of biofuel,
Indonesia's CPO exports are expected to rise to 9.6 million tons
from 8.7 million tons in 2004.

In 2003, the country exported 6.39 million tons of the
commodity.

ANJ Agri alone aimed at increasing its output to 479,000 tons
next year, of which up to 30 percent would be exported.

Wim added that currently Indonesia, the world's second largest
CPO producing country after Malaysia, was still facing a shortage
of seeds, forcing plantations to import these from Costa Rica.

Indonesia currently has only six firms producing 120 million
seedlings per year, while demand stands at 150 million seedlings,
Wim said.