11/12/2007 (The Economic Times), Jimbaran, Indonesia - Indonesia has no plans to alter the current palm oil export tax scheme, Trade Minister Mari Pangestu told Reuters on Tuesday, dampening expectations for a new scheme early next year. The tax scheme, under which export tax rates are adjusted monthly depending on movements of crude palm oil prices in international markets, was introduced in a bid to contain soaring local palm-oil based cooking oil prices.

Crude palm oil is subject to a maximum 10 percent tax rate if international markets average $850 a tonne. Bayu Krisnamurthi, deputy to the chief economics minister, said last month the current palm oil export tax rates would be kept until the end of this year while preparing for a new palm oil tax scheme to be introduced in January 2008. Asked if the palm oil tax rates would continue in January, Pangestu said: "Yes".

"The government team has no plans yet to change it," she said in an interview on the sidelines a meeting of trade ministers at U.N. climate talks on the resort island of Bali. Soaring palm oil prices have boosted local prices of palm-oil based cooking oil, one of staples for the 226 million people in Indonesia, where millions still live on less than $2 a day. Analysts have criticised the palm oil tax, saying that while it has helped control local prices it has hurt palm oil consumers in other countries. Indonesian moves to raise the palm oil tax every month have helped boost Malaysian palm oil futures, although the market has fallen back recently.

Malaysian palm oil market closed at 2,868 ringgit a tonne on Monday, falling 6.5 percent from the record high of 3,068 ringgit hit at the end of November. Indonesia is set to overtake Malaysia as the world's top palm oil producer, with output seen at 17 million tonnes this year. But Pangestu said growth of the country's non oil-gas exports may slow to 14.5 percent next year, compared to estimated 17 percent growth this year.

"Our target is still around 14.5 percent for non oil-gas exports but there could be downside risk for lower growth," she said, without elaborating. Analysts said the global economy could slow as problems in the U.S. subprime mortgage affect the health of the world's largest economy. But strong demand for commodities such as palm oil, rubber and minerals from Asian economic powerhouses China and India should help Indonesia sustain exports in the months ahead despite the U.S. slow down. -Reuters-