Producers in dark over CPO export ban

Producers in dark over CPO export ban

JAKARTA (JP): Edible and palm oil producers expressed
confusion and frustration yesterday over reported remarks by
Minister of Trade and Industry Mohamad 'Bob' Hasan Monday that he
would maintain the export ban on palm oil indefinitely despite
the agreement with the IMF to lift it by April 22.

"I reckon the International Monetary Fund (IMF) has a special
monitoring team in Jakarta to see to it that the latest reform
package is fully implemented," said M. Nafis Daulay, Chairman of
the Indonesian Association of Edible Oil Industries.

Separately, Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita denied yesterday that the
government would maintain the export ban, confirming that the ban
would be lifted by April 22 as agreed with the IMF.

Daulay told The Jakarta Post from Medan that the government
had no alternative but to properly execute the reform as agreed.

"If the agreement stipulates it, what can the minister (Hasan)
say," Daulay added in referring to the 117-point supplementary
memorandum on the Jan. 15, 1998 reform package agreed with the
IMF last week.

Daulay was commenting on Hasan's statement to several
newspapers Monday that he would not issue any export licenses for
palm oil and its products, pointing out that "we did not make an
agreement with the IMF (on the export ban). We are not the
republic of the IMF, but the Republic of Indonesia."

"Quantitative restrictions on palm oil, olein and stearin
exports will be replaced by an export tax of not more than 40
percent by April 22," states a clause of the structural reform
chapter of the April 7 Supplementary Memorandum of Economic and
Financial Policies.

An executive of a CPO producer in West Sumatra expressed
dismay and disgust yesterday over the conflicting and confusing
signal from Minister Hasan.

"We, major palm oil refiners, agreed in Jakarta last week, in
response to Hasan's request, to cap the ex-factory price of
processed palm olein at its current level of Rp 2,750 (34 U.S.
cents) a kilogram.

"And now we get this conflicting and confusing statement as we
are preparing to resume exports next month," added the executive
who asked for anonymity.

Sacrifices

He said major CPO producers had been forced to make a lot of
sacrifices as a result of the blanket export ban on CPO and its
derivatives since January.

"It is extremely strange and entirely against economic sense
to continue the export ban as our national production is
estimated at almost six million tons this year while the domestic
demand is projected at only 3.5 million tons," added the
executive who insisted on anonymity.

The government, he added, should instead intensify its
campaign against CPO smuggling and improve supervision to prevent
officials from colluding with traders and producers to allow
illegal CPO shipments overseas.

Chairman of the Indonesian Palm Oil Producers Association
(Gapki) Derom Bangun in Medan refused to comment on Hasan's
statement.

"Anyway, we have yet to wait for a ministerial decree to
officially lift the export ban," Derom said.

"It is not true," Ginandjar told Reuters yesterday in
commenting on Hasan's remarks to the Media Indonesia and
Republika newspapers that the export ban would be maintained
until domestic cooking oil prices stabilized.

Ginandjar reiterated that the export ban on CPO and its
derivatives would be lifted on April 22, and the minister of
finance was replacing it with export taxes of up to 40 percent.

A CPO producer in Medan, North Sumatra, also warned yesterday
of strong lobbying by some palm oil traders to have lower export
taxes on olein exported in drums instead of in bulk form (by
tanker).

"If this preferential tariff is given, this will not only
affect domestic cooking oil prices but also the supply of drums
for use in inter-island cooking oil transportation," he said.

He argued that a lower export tax on olein in drums would make
exports much more attractive and this might reduce supplies to
the domestic market and consequently raise prices.

"Moreover, olein exported in drums would make it more
difficult to carry out official inspections for the purpose of
determining export taxes," he said. (gis/jsk/rei)