MARKET DEVELOPMENT
Govt may increase duty on CPO exports by 5 percent
Govt may increase duty on CPO exports by 5 percent
8/6/07 (The Jakarta Post/Jakarta) - In an attempt to curb the rising price of domestic cooking oil, the government may impose an additional 5 percent export duty on crude palm oil (CPO) -- the main raw material used in cooking oil -- next month.
Trade Minister Mari Elka Pangestu said Thursday that the additional duty will be applied starting July if the price of cooking oil remains above Rp 7,000 per kilogram.
The increase will bring the export duty on CPO to 6.5 percent.
"The new rate will be applied if the price of cooking oil has not yet stabilized by the end of June, and remains beyond the reach of many consumers," Mari told reporters after a Cabinet meeting at the Bina Graha Presidential Office.
The price of CPO on international market, which has risen by more than 30 percent so far this year, is currently hovering at between $650 and $700 a metric ton.
Following a steady climb in international CPO prices, the retail price of cooking oil has now reached Rp 9,000 per kilogram in a number of regions.
Mari said the proposed increase in duty was aimed at discouraging CPO exports and boosting domestic supply. Indonesia is the world's second largest CPO exporter after Malaysia.
Mari said that once the price of cooking oil stabilized at Rp 7,000, the government will remove the additional five percent export duty.
Mari added that it was difficult to predict the fluctuations in CPO prices on the international market, but said they would likely remain high thanks to high global demand, especially from the turbo-charged economies of China and India.
A levy of 1.5 percent is currently applied to crude palm oil exports, while exports of other palm oil products are subject to 0.3 percent duty. Meanwhile, palm kernel exports are subject to a 3 percent duty.
Indonesia expects to produce 17.5 million tons of CPO this year, of which 52 percent set is destined for export.
It is feared that the rise in the price of cooking oil, one of the country's so-called nine basic commodities, could stoke up inflation.
Trade Minister Mari Elka Pangestu said Thursday that the additional duty will be applied starting July if the price of cooking oil remains above Rp 7,000 per kilogram.
The increase will bring the export duty on CPO to 6.5 percent.
"The new rate will be applied if the price of cooking oil has not yet stabilized by the end of June, and remains beyond the reach of many consumers," Mari told reporters after a Cabinet meeting at the Bina Graha Presidential Office.
The price of CPO on international market, which has risen by more than 30 percent so far this year, is currently hovering at between $650 and $700 a metric ton.
Following a steady climb in international CPO prices, the retail price of cooking oil has now reached Rp 9,000 per kilogram in a number of regions.
Mari said the proposed increase in duty was aimed at discouraging CPO exports and boosting domestic supply. Indonesia is the world's second largest CPO exporter after Malaysia.
Mari said that once the price of cooking oil stabilized at Rp 7,000, the government will remove the additional five percent export duty.
Mari added that it was difficult to predict the fluctuations in CPO prices on the international market, but said they would likely remain high thanks to high global demand, especially from the turbo-charged economies of China and India.
A levy of 1.5 percent is currently applied to crude palm oil exports, while exports of other palm oil products are subject to 0.3 percent duty. Meanwhile, palm kernel exports are subject to a 3 percent duty.
Indonesia expects to produce 17.5 million tons of CPO this year, of which 52 percent set is destined for export.
It is feared that the rise in the price of cooking oil, one of the country's so-called nine basic commodities, could stoke up inflation.