No imminent change in CPO export tax
No imminent change in CPO export tax
JAKARTA (JP): The government has no immediate plan to reduce
export taxes on crude palm oil (CPO) and its derivatives despite
a drop in international prices.
Minister of Industry and Trade Rahardi Ramelan said on
Thursday the 40 percent export taxes on palm oil products would
remain in place at least until May.
"For now, I will not lower the taxes at least for the next two
months," Rahardi said.
Rahardi said he feared the price of cooking oil, the refined
byproduct of CPO, would rise sharply if the government lowered
the taxes.
"Rumors the government would reduce the tax have been
spreading in the market, causing higher prices of CPO and cooking
oil in the domestic market. But I reiterate, do not expect any
cuts in CPO export tax."
He said the government would not increase the export tax until
CPO production is sufficient to meet demand.
"If our CPO production increases sharply, perhaps to 7 million
or 8 million tons, then we do not have to worry about lowering
the export tax," he said, adding that the country's CPO
production is expected to surpass 6 million tons this year.
The government imposed an export tax on CPO products last year
to curb the surge in cooking oil prices on the domestic market.
Exporting has become an attractive option for producers since
the rupiah dropped sharply in value against the U.S. dollar.
The rupiah currently trades between Rp 8,000 and Rp 9,000
against the greenback, compared to its precrisis level of Rp
2,450 in July 1997.
Most CPO producers export their products which has led to
short supplies on the domestic market. As a result, the price of
cooking oil has increased sharply.
In February, the government slashed the export tax on CPO,
palm oil kernels and crude palm olein, to 40 percent each from 60
percent. It also lowered the export tax of refined bleached
deodorized (RBD) palm oil and RBD palm olein to 32 percent each
from 55 percent.
Many CPO producers have called on the government to further
cut the tax. Rahardi instead lowered basic export prices of CPO
and its byproducts last month, to match declining CPO prices on
the international market and the strengthening of the rupiah's
value against the U.S. dollar.
Prices are determined every month for calculation of the
export tax payment, he said.
The basic export CPO price starting March 2 to March 31 was
lowered to US$430 per ton this month from $535 in January,
Rahardi said.
He said CPO prices on the international market were dropping
due to the use of cheaper vegetable oils such as soybean and
canola. (gis)