No plans to lower CPO export taxes soon: Rahardi

JAKARTA (JP): The government has no immediate plan to reduce export taxes on crude palm oil (CPO) and its derivatives despite a drop in cooking oil prices on the domestic market in recent weeks.

Minister of Trade and Industry Rahardi Ramelan acknowledged on Friday that prices were lower, but he said it was not sufficient to affect the application of taxes.

Current export taxes of palm oil commodities -- imposed in June to discourage exports and ranging up to 60 percent -- will continue, he added, until prices of cooking oil reached the ideal level of below Rp 5,000 per kilogram.

"Let the market prices of cooking oil drop first, then we'll calculate together how much the export taxes can be reduced," he told reporters at the ministry's office.

"For now, I will not lower the taxes until further developments."

Minister of Forestry and Plantation Muslimin Nasution told an international seminar on CPO in Bali on Wednesday the government would lower the export tax to 52 percent from 60 percent by year's end, noting that domestic supplies of cooking oil, mostly made of CPO, would have increased by then.

Rahardi argued the supply was still relatively low, although it had increased slightly since the government lifted subsidies on the product earlier this month.

"The volume is not enough yet, what is out in the market is the stock that had been hoarded," he said, reiterating the government's suspicion that its attempts to contain cooking oil prices were undermined by hoarders.

He said the government would have to wait until cooking oil supplies flooded the domestic market before it could decide to lower the taxes.

Earlier this year, the government imposed an export ban on all palm-oil commodities for three and a half months in a bid to guarantee domestic supply of the cooking oil and contain its price, which has been on a sharp rise since the end of last year.

Neither the export ban nor the high taxes have proved effective in stabilizing the price.

Suspicions arose that the commodities were smuggled out of the country or hoarded by producers and distributors because international prices of the commodities were much higher than the domestic ones.

The Ministry of Trade and Industry's Market Information Center says unpackaged cooking oil is currently being sold at Rp 6,500 (59 U.S. cents) per liter at traditional markets, down from above Rp 7,500 last month. (das)