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)