GAPKI (20/05/2025) - JAKARTA – The Indonesian Palm Oil Association’s (GAPKI) Chairman Eddy Martono said the increase of export levy of crude palm oil (CPO) from 7.5% to 10% will weaken the competitiveness of Indonesia’s palm oil products at the global market.

Eddy Martono was commenting on the decision of the finance ministry to increase the export levy of palm oil from 7.5% to 10%, starting from Saturday, 17 May 2025. The new tariff is stated in the finance ministry regulation No. 30/ 2025 (PMK No. 30/2025) on service tariff of the Public Service Agency For Plantation Fund Management (BLU BPDP), which was issued on 14 May 2025 and made effective since 17 May 2025.

“The increase of export levy will make our palm oil products less competitive at the global market as compared to our competitors’ products,” Eddy said in Jakarta on Friday (16/5/2025).

According to him, the new export tariff  will further increase the export burden of Indonesia’s palm oil products. “Previously, our palm oil industry has been subjected to three export burdens — Domestic Market Obligation (DMO), export levy (PE), and export tax (BK). Total financial burden borne by the palm oil industry already reached US$221 per ton. With the new tariff, our burden will certainly increase. But we could not yet quantify it as we have yet to make a new calculation on this,” said Eddy.

Eddy said that the increase of tariff will also impact the welfare of smallholders who are greatly susceptible to the price fluctuations of fresh fruit bunches (FFB) they sell. “The decrease in CPO prices at the domestic market will reduce the income of smallholders,” he said.

“It means the price of raw material for our downstream industries will be cheaper. But on the other side, the price of our palm oil exports will also rise due to the increase of export levy,” he said.

Considering the potential impacts, GAPKI has formally sent a letter to Finance Minister Sri Mulyani Indrawati, asking for the government to delay the implementation of the new export levy of palm oil. “Increasing the palm oil export levy amid the uncertain end of trade war between USA and China, and the ongoing geopolitical tensions in a number of regions will further weaken the competitiveness of Indonesia’s palm oil products,” GAPKI stated in the letter.

A spokesman of BPDP said that the GAPKI’s request will be discussed by related ministries in the near future. So far, there has been no response from the ministry of finance and the economic coordinating ministry.

But Eddy Martono said that the financial burden of the palm oil industries will only weaken the competitiveness of Indonesia’s palm oil products at the global market, and it will not result in layoffs. “I think it will only reduce our competitiveness, and won’t result in layoffs,” Eddy told Kontan.co.id on Sunday (18/05/2025).

He also said that currently Indonesia’s palm oil exports are dominated by downstream products, mainly refined palm oil and oleo-chemical products. “Our export in the form of CPO is only around 10%,” said Eddy.

Based on data from GAPKI, in 2024 total volume of Indonesia’s palm oil exports reached 29.5 million tons, consisting mostly of refined palm oil at 20.4 million tons and oleo-chemical at 4.8 million tons. (*)

Read more at https://gapki.id/en/news/2025/05/20/gapki-export-levy-rise-makes-palm-oil-less-competitive/