Tax imposed on CPO exports to protect local producers

JAKARTA (JP): The government, beginning today, will introduce an export tax on crude palm oil (CPO) products to protect local producers and to stabilize domestic cooking oil prices.

Agus Haryanto, a spokesman for the Ministry of Finance, said yesterday that the measure was introduced by the Ministry of Finance based on recommendations from the Ministries of Trade, Agriculture and Industry as well as Bulog, the government-run semi-buffer stock agency.

The tax will be imposed when the price of cooking oil on the local market reaches above Rp 1,250 (57 U.S. cents) per kilogram, he said, adding that the rates will vary according to the volume of the CPO exports and their FOB (free on board) prices.

Ibrahim Hasan, the chairman of Bulog, said earlier that restricting CPO exports is essential in anticipating the possible shortage of CPO supply in the country.

Bulog, which controls the supply and prices of scores of foodstuffs, including rice, sugar and cooking oil, recently imported around 50,000 tons of olein, a CPO product for cooking oil production, to curb an increase in cooking oil prices at home.

The chairman of the association of cooking oil producers said recently that introducing the progressive tax on CPO exports may discourage new investment for CPO production.

The government is currently engaged in an intensive campaign to encourage investors to open palm oil plantations in a bid to increase annual CPO production to around seven million tons by 2000 from around four tons at present.

The prices of CPO products in Indonesia, the lowest in Asia, have discouraged producers from selling their products at home. The price of cooking oil, for example, is US$663 per ton, lower than $680 in Malaysia, the world's biggest producer of palm oil, and $720 in Europe.(hen)