21/01/2011 (Jakarta Globe) - Indonesia may raise its palm oil export tax to 25 percent from 20 percent starting in February after a rally in international prices, industry sources familiar with the matter said on Friday.

The base export price for crude palm oil is likely to be set at $1,194 per ton in February, up from $1,112 per ton in January, a source in the Industry Ministry said on condition of anonymity.

“It isn’t surprising. They always revise up these taxes in order to control the outflow, so the domestic side can keep some for themselves,” a palm oil analyst said.

 “Whenever they hike export taxes, you see prices moving up because it constrains supplies.”

Market talk that Indonesia, the world’s largest palm oil producer, would lift the export tax to a maximum level of 25 percent in February, has swirled in the industry for weeks.

The export tax is intended to ensure that domestic requirements are met in Southeast Asia’s biggest economy, and to reduce volatility in domestic cooking oil prices.

An export tax for cocoa beans will remain unchanged at 10 percent from January with the base export price likely to be set at $2,671 per ton, sources added.

Aside from the possible tax hike, February could be an eventful month for the palm oil industry.

Deputy Agriculture Minister Bayu Krisnamurthi said on Friday that Indonesia would test voluntary green standards for palm oil producers before rolling out a mandatory scheme in 2012.

Amid pressure from environmental groups to halt deforestation that speeds up global warming, the Agriculture Ministry said in April it planned to issue Indonesian Sustainable Palm Oil certification to planters.

Bayu said on Friday that between 10 and 20 companies would be evaluated for ISPO standards in the pilot program in February.

At the same time, the government will hold a workshop on ISPO with local governments, the private sector and NGOs.

At an event marking the 100-year anniversary of palm oil commercialization on March 29 in Medan, the government will officially launch ISPO.

The Roundtable on Sustainable Palm Oil, which groups planters, environmental groups and consumers, is the only other major group to set up green standards for the whole industry.

Unlike the RSPO, which does not impose sanctions on members that violate its voluntary standards, those found in violation of ISPO rules will be punished by law, a ministry official said in November.

New RSPO secretary general Darrel Webber this week said ISPO was “excellent” and would complement the RSPO.

April-delivery palm oil futures rose 0.4 percent to 3,748 ringgit ($1,225) per metric ton, the highest for the most-active contract since Jan. 7, in Kuala Lumpur.

Prices climbed 1.8 percent this week, ending two weeks of losses.

Prices of palm and soybean oils hit the highest level in more than two years on concern than supplies may tighten as dry weather threatens harvests in Latin America and flooding disrupts oil palm harvests in Indonesia and Malaysia.