JAKARTA. Indonesia, the world’s largest palm oil producer, will maintain the current export tax regime that it considers to be effective in spurring growth in the downstream industry, despite new policies from its main competitor and buyer, a top official says. The government would be consistent in its goal to promote value-added in the palm oil industry and boost new investment in refineries, Deputy Trade Minister Bayu Krisnamurthi said. “The progress we’ve seen in the downstream industry and new investments are the effects of our current export tax structure,” he said over the weekend in Jakarta. Bayu said that the policy was “on the right track”, citing a higher utilization of refining capacities from 70 percent in late 2011, when the tax structure was first launched, to 90 percent at present. India, the main buyer of Indonesian palm oil, announced on Friday that it would charge a 2.5 percent import tax on crude palm oil (CPO), the first time since 2008, following record imports due to the commodity’s falling price in the international market, which its processors and refiners said hurt local oilseed farmers. However, a 7.5 percent import duty on refined palm oil will remain unchanged.India had previously scrapped the CPO tax in April 2008 to curb high inflation.The benchmark price to calculate the import tax would also be changed for the first time since 2006 on all cooking oils on a fortnightly basis, India’s Agriculture Ministry said as quoted by Bloomberg. Indonesia’s palm oil industry also faces another challenge due to a new tax policy from its main rival, Malaysia, the world’s second-largest palm oil producer, which has set zero export taxes on CPO for January and February.Malaysia’s measure is a response to Indonesia’s new tax regime put in place in late-2011, which cut export tax on refined palm oil products from 25 percent to 10 percent, to foster growth in the processing and refining industry.Indonesian Palm Oil Industry Association executive director Fadhil Hasan said that the new Indian tax on CPO would not significantly affect Indonesia’s exports as it was also applied on soybean oil. Therefore, Fadhil added, the government needed no counter policy in response to India’s move.“Our competitors produced other edible oils locally in India,” he said, adding that palm oil still had the competitive edge compared to other oils, due primarily to its considerably lower price.Last week, Trade Minister Gita Wirjawan said that Indonesia might slash the export tax on CPO to better compete with Malaysia, but did not disclose any details. In the future, Indonesia would maximize the absorption of CPO for bio-fuel production rather than react to counter the new policies introduced by other countries, Bayu said. Local palm oil producers were expected to invest in storage facilities so that stocks could be held for longer in the event of unfavorable conditions, he added. (Linda Yulisman/ The Jakarta Post)
RI to keep palm tax amid stiff competition
JAKARTA. Indonesia, the world’s largest palm oil producer, will maintain the current export tax regime that it considers to be effective in spurring growth in the downstream industry, despite new policies from its main competitor and buyer, a top official says. The government would be consistent in its goal to promote value-added in the palm oil industry and boost new investment in refineries, Deputy Trade Minister Bayu Krisnamurthi said. “The progress we’ve seen in the downstream industry and new investments are the effects of our current export tax structure,” he said over the weekend in Jakarta. Bayu said that the policy was “on the right track”, citing a higher utilization of refining capacities from 70 percent in late 2011, when the tax structure was first launched, to 90 percent at present. India, the main buyer of Indonesian palm oil, announced on Friday that it would charge a 2.5 percent import tax on crude palm oil (CPO), the first time since 2008, following record imports due to the commodity’s falling price in the international market, which its processors and refiners said hurt local oilseed farmers. However, a 7.5 percent import duty on refined palm oil will remain unchanged.India had previously scrapped the CPO tax in April 2008 to curb high inflation.The benchmark price to calculate the import tax would also be changed for the first time since 2006 on all cooking oils on a fortnightly basis, India’s Agriculture Ministry said as quoted by Bloomberg. Indonesia’s palm oil industry also faces another challenge due to a new tax policy from its main rival, Malaysia, the world’s second-largest palm oil producer, which has set zero export taxes on CPO for January and February.Malaysia’s measure is a response to Indonesia’s new tax regime put in place in late-2011, which cut export tax on refined palm oil products from 25 percent to 10 percent, to foster growth in the processing and refining industry.Indonesian Palm Oil Industry Association executive director Fadhil Hasan said that the new Indian tax on CPO would not significantly affect Indonesia’s exports as it was also applied on soybean oil. Therefore, Fadhil added, the government needed no counter policy in response to India’s move.“Our competitors produced other edible oils locally in India,” he said, adding that palm oil still had the competitive edge compared to other oils, due primarily to its considerably lower price.Last week, Trade Minister Gita Wirjawan said that Indonesia might slash the export tax on CPO to better compete with Malaysia, but did not disclose any details. In the future, Indonesia would maximize the absorption of CPO for bio-fuel production rather than react to counter the new policies introduced by other countries, Bayu said. Local palm oil producers were expected to invest in storage facilities so that stocks could be held for longer in the event of unfavorable conditions, he added. (Linda Yulisman/ The Jakarta Post)
