JAKARTA, Jan 21 - The government's plan to raise export tax this year oncrude palm oil (CPO) is feared to affect the performance of the country'spalm oil sector.

Rosediana Suharto of the Indonesian Palm Oil Commission, said a draftproposal has been submitted to the state secretariat calling for anincrease in the CPO export tax of up to 60 per cent.

Imposition of a high export tax will result in big losses of marketfoothold in the world, Rosdiana said quoting a study by the Oil World thatevery increase of 1 percentage point in export tax will cause a loss of0.8 per cent in market share.

If the government decides to raise the import duty Indonesia - the secondlargest producer of CPO - will lose a big part of its market share toMalaysia, the world's largest producer, she added.

Malaysia benefited in 1998 when the government slapped a 60 per centexport tax on CPO to curb exports to prevent a shortage in domesticsupply.

Once you lose your foothold, it will take much sacrifice to regain it,Rosdiana said.