Stock Groups

Indonesia to cut maximum palm oil export tax and levy to a combined $488/T


© Reuters. FILEPHOTO: A line of trucks carrying palm oil and fresh fruit stands in front of a West Aceh factory, Indonesia on May 17, 2022. This photo was taken by Antara Foto. Antara Foto/Syifa Yulinnas/ via REUTERS

By Stefanno Sulaiman

JAKARTA (Reuters), – Indonesia’s Trade Minister Muhammad Lutfi stated Tuesday that his government plans to reduce the maximum crude palm oil export rate and levy rate by $488 per tonne, down from $575 per tonne. This is to increase shipments.

After a three week ban in Indonesia, Indonesia has permitted palm oil exports to resume. However, there has been slow progress due to red tape and the full storage tanks of palm oil mills.

The mills still limit the purchases of farmers, which has led to low prices for palm fruits.

Lutfi stated that the government will increase the maximum tax by $288 per ton, while lowering maximum levy to $200/tonne. Indonesia charges an export tax of up to $200 per tonne and a levy of no more than $375 per per tonne.

Lutfi has not specified when these new fees will apply.

Oke Nurwan, a senior Trade Ministry official said that the current tax and levy rates are too high.

Reporters were told by him that exports should flow as storage tanks are full.

To control rising domestic prices for palm oil cooking oil (also known as crude palm oil) Indonesia banned the export of some derivatives and raw palm oil from April 28th, 2013.

The government established a policy that requires palm oil producers to sell some of their product locally before export permits can be granted. This is in order to ensure that there will still be sufficient supply domestically after the ban was lifted.

In order to allow for more storage space, the industry has requested that the government increase its export quotas during transition periods after many palm oil mills had stopped buying palm fruits directly from farmers.

Lutfi replied that they were reviewing the request. Lutfi stated that companies can export five times as much as they sell locally.