31/07/2015 (Borneo Post) - Indonesia Finance Ministry has issued a new regulation with regards to export taxes for palm oil products and based on the new regulation, the export tax for palm oil products will now be expressed in US dollar per metric tonne (MT).

MIDF Amanah Investment Bank Bhd’s research arm noted that this is the second change in July after the introduction of US$50 per MT levy on palm oil exports on July 16.

Effectively, it saw no change to crude palm oil (CPO) exporters at current CPO price of circa US$560 per MT as they will still pay the same US$50 per MT.

“We are positive on the changes as it provides better clarity for plantation industry in Indonesia. With the new system, the all in tax will be the CPO export tax plus the US$50 per MT levy.

“Recall that the previous calculation sets the base price on monthly basis in which the percentage of tax will be determined. For example, export tax for CPO range from 7.5 per cent to 22.5 per cent when CPO price exceeds US$750 per MT,” said the research house.

MIDF Research calculation shows that there is indeed some savings in CPO export tax under the new palm oil export tax structure as compared to the previous one, however, the savings will only materialise when CPO price exceeds US$750 per MT.

“We do not expect such scenario to happen in the near term,” it said.

Ivy Ng, CIMB Investment Bank Bhd’s regional head of plantation added to this stating that, “our analysis revealed that the new export tax is lower, mainly to reflect the new export levy on palm products.

“However, we are neutral on the new export tax as its impact on planters’ earnings at the current CPO price level is not significant.”