Plan to up export tax on palm criticized

Zakki P. Hakim, The Jakarta Post, Jakarta

The Ministry of Finance's plan to increase tax revenue from the export of plantation commodities would discourage the industry from exporting the commodities, which in turn would eventually reduce state revenue, an official with the Ministry of Industry and Trade said on Tuesday.

Ministry of Industry and Trade official Sabar H. Pasaribu said that his office had opposed the plan as it would hamper the export of key commodities such as crude palm oil (CPO).

According to Sabar, the Ministry of Finance planned to increase the tax revenue by using the market price as the export base price (HPE) instead of the current fixed price of US$160 per ton for CPO.

Exporters would then pay 3 percent of the HPE as tax.

Using the average CPO market price of $400 per ton, exporters would have to pay $12 per ton of exported CPO, or 250 percent higher than the current rate of $4.8 per ton.

Sabar said that the export tax mechanism was originally aimed at regulating exports, not as a source of tax income for the government.

The country's CPO export volume is projected to increase by 7.69 percent this year to 7 million tons from 6.5 million tons last year.

Production is projected to slightly increase to 10.4 million tons from 9.9 million tons last year.

Indonesia exports CPO to China, India, Pakistan, Bangladesh, the Netherlands and new markets such as eastern Europe.