Indonesia palm oil group GAPKI urges government to delay levy hike
MSN (19/05/2025) - JAKARTA (Reuters) -The Indonesia Palm Oil Association, GAPKI, on Friday urged the government to delay a planned hike in the palm oil export levy, warning it could harm competitiveness amid global trade uncertainties due to the U.S. tariffs and geopolitical tension.
Indonesia is due to raise its palm oil export levy to between 4.75% and 10% from May 17 to help fund a biodiesel blending mandate as well as a palm oil replanting programme. The levy currently stands at 3% to 7.5%.
"The situation is full of uncertainties and it is a big risk to launch a policy that will impact competitiveness of Indonesia's palm oil exports," GAPKI said in a letter addressed to Finance Minister Sri Mulyani Indrawati.
A spokesperson for the palm oil fund that collects the levy said GAPKI's request will be discussed at a meeting with government ministries next week. The finance ministry and coordinating ministry of economic affairs did not respond to a request for comment.
Indonesia, the world's biggest palm oil producer, is facing proposed U.S. tariffs of 32%, while number two producer Malaysia faces a 24% rate. The tariffs have been put on hold until July.
"It is feared that this will make Indonesian palm oil exports increasingly uncompetitive compared to Malaysia, especially for the U.S. market which is currently dominated by Indonesia," the group said.