16/04/2008 (Forbes), Jakarta - Indonesia's Trade Ministry on Wednesday said it has issued a regulation requiring the verification

of crude palm oil (CPO) and refined products intended for inter-island trade to prevent smuggling.

Indonesia is the world's biggest CPO producer, with output predicted to reach 18.4 million tons in 2008.

Many traders smuggle palm oil products out of the country to avoid paying high taxes. The Indonesian government has repeatedly hiked the tax on CPO exports since June last year to ensure sufficient domestic supply and to stabilize the price of cooking oil.

The current tax on CPO exports is at 20 percent, but could go up to 25 percent if CPO prices rise.

In Indonesia, a country with a population of more than 230 million, CPO is widely used to produce cooking oil. The government has been subsidizing cooking oil prices to mitigate the impact of rising prices on poor families.

The regulation, which will take effect on April 25, requires that the verification of the type and amount of products must be done twice -- at the time of loading and unloading the shipment.

The products covered by the regulation include palm fruits, CPO, refined bleached deodorized

palm oil, crude palm olein, and palm kernel oil.

The ministry said the tolerable gap between the amount of products to be loaded and unloaded should not exceed 1 percent for liquid products and 5 percent for fresh palm fruits and kernel.

The surveyor must report to the domestic trade director general at the trade ministry if it finds a bigger discrepancy.