Indonesia To Maintain Current Palm Oil Export Tax
06/10/2012 (Bernama) - World's largest palm oil producer, Indonesia, will maintain its current palm oil export tax despite a potential export tax cut by its top competitor, Malaysia.
Deputy Trade Minister Bayu Krisnamurthi said the current 10 per cent export tax could further boost the development of the local downstream industries.
He said the government needs to monitor a three-year average prices before changing its export tax policy instead of reacting to a single price drop.
"Business players expect a consistent (government's) policy. We must anticipate the market, but at the same time, must remain consistent," Bayu was quoted as saying by an English daily "The Jakarta Post", Friday.
Malaysia's Plantation Industries and Commodities Ministry has recently proposed a plan to slash its palm oil export tax to between eight per cent and 10 per cent from 23 per cent currently to push up exports.
The daily said the measures to be taken by Malaysia were in response to counter Indonesia's tax regime that was adjusted late last year, which lowered its export tax on refined palm oil products from 25 per cent to 10 per cent.
The new Indonesian tax structure complements a progressive tax on crude palm oil (CPO) exports, which starts at 22.5 per cent whenever the price of the commodity goes beyond US$750 a tonne.
Exporters are required to pay 1.5 per cent export tax for every US$50 increase in the price from the threshold.
The Indonesian government said this structure had created incentives for players in the palm oil refinery industry, thus boosting Indonesia's competitiveness against rival Malaysia.
Trade statistics show between January and July, CPO exports have dropped by 16.93 per cent to 3.67 million tonnes by volume from a year earlier, while refined palm oil exports rose by 72.14 per cent to 7.62 million tonnes.
In line with this, CPO exports value has also shrank by 25 per cent to US$3.63 billion during the designated period, compared to refined palm oil exports that climbed by 53.20 per cent to US$7.81 billion.