Rahardi Ramelan says CPO export taxes remain in force

Rahardi Ramelan says CPO export taxes remain in force

JAKARTA (JP): The government is retaining high export taxes on
crude palm oil (CPO) and its derivatives despite a significant
decline in domestic prices in recent weeks.

Minister of Trade and Industry Rahardi Ramelan said on Monday
the 60 percent export taxes on the palm oil products would likely
remain until at least next January.

"The export taxes are fixed, it will not be changed," Rahardi
told reporters.

In June, the government imposed export taxes of up to 60
percent on CPO and its derivatives to discourage exports.

The ministry has lowered the basic export prices of CPO and
its by-products this month to match the declining trend of the
CPO prices in the international market and the strengthening of
the rupiah's value against the U.S. dollar.

Prices are determined every month for the calculation of the
export tax payment.

The basic export price of CPO starting Oct. 9 to Nov. 8 were
lowered to US$595 per ton this month from $630 in September,
Rahardi said.

Rahardi said the domestic supply of CPO, the main material for
the production of cooking oil, had increased significantly in the
last several weeks following the government's move last month to
cut the subsidy on the sales of the commodity at home.

The government previously controlled the cooking oil
distribution through the State Logistics Agency (Bulog), which
sold the cooking oil at a subsidized price of Rp 4,000 per
kilogram. But the market price was far higher at between Rp 6,000
to Rp 7,500 per kilogram as Bulog's supply was too small to
affect the prices. Many producers benefited from the market
situation by hoarding their stocks to keep the price at a high
level.

The subsidy was removed last month, and the government handed
over the task of distributing cooking oil to the Indonesian
Distribution Cooperatives (KDI), with Bulog's assistance, until
the end of this year.

Removal of the subsidy should have theoretically pushed up the
prices, but the government's move last month instead caused the
price to drop.

According to a government official, the price cut was possible
not only due to an increase in the domestic supply, but because
speculators no longer dared to keep their cooking oil stocks.

Prices of cooking oil sold by non-KDI members were even much
lower than those marketed through the KDI network in the past
several weeks. The price difference caused public consternation,
especially after Rahardi said non-KDI members had dumped their
stocks on the market to eliminate KDI's role in the sales of the
cooking oil.

KDI members, which buy their stocks through state-owned
cooking oil producers, sold the edible oil at Rp 5,000 per
kilogram, while non-KDI members sold their supply at much lower
prices. This caused big losses to KDI members.

KDI has removed the price ceiling and adjusts the price
according to the market situation.

At Monday's media conference, Rahardi retracted his earlier
comment over dumping on the market, and added that the losses
suffered by KDI were much lower than the amount of money the
government spent to subsidize the cooking oil. (das)