MARKET DEVELOPMENT
Challenging Outlook for Export Duties in 2016
Challenging Outlook for Export Duties in 2016
12/01/2016 (Jakarta Post) - The government says state revenue from export duties in 2016 will continue to be a challenge as commodity prices have remained low.
According to Heru Pambudi, the director general of customs and excise, the government will not post stellar targets as in previous years because pressures on crude palm oil (CPO), the country’s major export, still exist.
“We are very aware of the situation. We won’t be able to collect export duty from CPO if the price keeps on sliding from its current position,” he said in a press conference on Friday.
Last year, the government revised the calculation for CPO export duty to cope with the falling prices.
The duty was lowered to US$3 per metric ton as long as the reference price ranged between $750 and $800 per ton, while previously the duty was set at 7.5 percent for the same reference price.
“We could not collect CPO export duty because the reference price never exceeded $750 per ton in 2015,” Heru added.
The government eventually posted a poor performance, reaping only Rp 3.9 trillion ($281.1 million) in total export duties in 2015, as shown in the latest data from the directorate general of customs and excise.
The outcome was far from the Rp 12.1 trillion target set within the state budget and well below the Rp 11.3 trillion obtained in 2014.
“We think that the situation will not improve much this year. That’s why we only set the export duty target at Rp 2.88 trillion in the 2016 state budget,” he said.
The government’s conviction of another “low price” year was backed by the Indonesian Palm Oil Board (DMSI). The board previously said that it would be difficult for the CPO price to climb higher than $650 per ton in 2016. Heru said the government would rely on exports of minerals and coal for revenue in 2016, in addition to palm oil derivative products and leather.
Meanwhile, data from the directorate general showed that total revenues from both customs and excise stood at Rp 180.4 trillion in 2015, equal to 92.5 percent of the target.
Similar to export duties, import duties also failed to meet their target, reaching Rp 31.9 trillion of an expected Rp 37.2 trillion.
Excise became the only component that inched close to its target, standing at Rp 144.6 trillion of Rp 145.7 trillion, thanks to cigarette excise.
“Many companies produced a higher volume of cigarettes last year because they were anticipating higher excise in 2016. Approaching the end of 2015, we recorded an increase in demand for excise band by an average 26.7 percent compared to previous months,” Heru said.
He added that the directorate general was still holding talks with related institutions, such as the Health Ministry, regarding the planned implementation of excise on carbonated and sugary drinks.
“We have not decided on anything. We don’t want the implementation to negatively impact the national economy,” he said.
According to Heru Pambudi, the director general of customs and excise, the government will not post stellar targets as in previous years because pressures on crude palm oil (CPO), the country’s major export, still exist.
“We are very aware of the situation. We won’t be able to collect export duty from CPO if the price keeps on sliding from its current position,” he said in a press conference on Friday.
Last year, the government revised the calculation for CPO export duty to cope with the falling prices.
The duty was lowered to US$3 per metric ton as long as the reference price ranged between $750 and $800 per ton, while previously the duty was set at 7.5 percent for the same reference price.
“We could not collect CPO export duty because the reference price never exceeded $750 per ton in 2015,” Heru added.
The government eventually posted a poor performance, reaping only Rp 3.9 trillion ($281.1 million) in total export duties in 2015, as shown in the latest data from the directorate general of customs and excise.
The outcome was far from the Rp 12.1 trillion target set within the state budget and well below the Rp 11.3 trillion obtained in 2014.
“We think that the situation will not improve much this year. That’s why we only set the export duty target at Rp 2.88 trillion in the 2016 state budget,” he said.
The government’s conviction of another “low price” year was backed by the Indonesian Palm Oil Board (DMSI). The board previously said that it would be difficult for the CPO price to climb higher than $650 per ton in 2016. Heru said the government would rely on exports of minerals and coal for revenue in 2016, in addition to palm oil derivative products and leather.
Meanwhile, data from the directorate general showed that total revenues from both customs and excise stood at Rp 180.4 trillion in 2015, equal to 92.5 percent of the target.
Similar to export duties, import duties also failed to meet their target, reaching Rp 31.9 trillion of an expected Rp 37.2 trillion.
Excise became the only component that inched close to its target, standing at Rp 144.6 trillion of Rp 145.7 trillion, thanks to cigarette excise.
“Many companies produced a higher volume of cigarettes last year because they were anticipating higher excise in 2016. Approaching the end of 2015, we recorded an increase in demand for excise band by an average 26.7 percent compared to previous months,” Heru said.
He added that the directorate general was still holding talks with related institutions, such as the Health Ministry, regarding the planned implementation of excise on carbonated and sugary drinks.
“We have not decided on anything. We don’t want the implementation to negatively impact the national economy,” he said.