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New levy boosts exports of processed palm oils

  • The Jakarta Post

    The Jakarta Post

Jakarta | Wed, August 19, 2015 | 03:54 pm
New levy boosts exports of processed palm oils Team up: State lender Bank Negara Indonesia (BNI) director Adi Sulistyowati (left), chats with (left to right) Indonesia Oil Palm Estate Fund (BPDP) president director Bayu Krisnamurthi, Bank Rakyat Indonesia (BRI) deputy president director Sunarso and Bank Mandiri deputy president director Sulaiman Arif Arianto at the Office of the Coordinating Economic Minister after signing a memorandum of understanding on palm oil development on Tuesday.(JP/Jerry Adiguna) (BNI) director Adi Sulistyowati (left), chats with (left to right) Indonesia Oil Palm Estate Fund (BPDP) president director Bayu Krisnamurthi, Bank Rakyat Indonesia (BRI) deputy president director Sunarso and Bank Mandiri deputy president director Sulaiman Arif Arianto at the Office of the Coordinating Economic Minister after signing a memorandum of understanding on palm oil development on Tuesday.(JP/Jerry Adiguna)

Team up: State lender Bank Negara Indonesia (BNI) director Adi Sulistyowati (left), chats with (left to right) Indonesia Oil Palm Estate Fund (BPDP) president director Bayu Krisnamurthi, Bank Rakyat Indonesia (BRI) deputy president director Sunarso and Bank Mandiri deputy president director Sulaiman Arif Arianto at the Office of the Coordinating Economic Minister after signing a memorandum of understanding on palm oil development on Tuesday.(JP/Jerry Adiguna)

The government'€™s new policy on levies for crude palm oil exports has contributed to a share increase for total processed palm oil products in the country as producers reduce their crude palm oil (CPO) shipments due to higher levies.

Indonesia Oil Palm Estate Fund (BPDP) president director Bayu Krisnamurthi said in Jakarta on Tuesday that the export of processed palm oil products had increased sharply following the launch of new levy policy in July.

According to agency data, refined, bleached and deodorized (RBD) crude palm oil and RBD palm olein accounted for 75 percent of total palm oil exports last month, while the share of CPO dropped to 25 percent from about 70 percent previously.

The special agency, set up as a public service agency under the Finance Ministry, has been collecting levies on exports of palm oil, also called CPO fund, since July 16 to develop the palm oil industry and pay for biodesel subsidies in Indonesia, the world'€™s largest palm oil producer.

The levies amount to US$30 per metric ton for processed palm oil and $50 per metric ton for CPO, according to the Finance Ministry rule.

Bayu said that the agency had collected Rp 750 billion (US$54.13 million) as of Aug. 17.

'€œFrom an industrialization point of view, this is positive because the more processed products we produce, the more added value we get. So we don'€™t only produce the raw material,'€ he told the press on Tuesday.

He said that the response showed that the new levy regulation had left palm oil exports unaffected.

However, he also admitted that the trend strayed from an initial prediction that CPO exports would surpass that of processed palm oil and that the levy charge might have to be reconsidered. The body aimed to garner up to Rp 4.5 trillion from levy collection this year.

The country remains the world'€™s largest producer of palm oil, with an estimated output of over 30 million tons annually, but around 70 percent of it is still exported in the form of low value-added product.

The government has pushed the use of biodiesel this year by boosting the domestic consumption of more environmentally friendly fuel and reducing dependence on oil imports to halt a deficit surge in the current account.

The government has estimated that the biodiesel program could increase the domestic use of palm oil by 5 million tons a year and cut the fuel import bill by $2 billion.

The CPO fund will be used to subsidize sales of biodiesel used for the mandatory blending of diesel.

The new subsidized diesel, BI 15, officially launched by Pertamina Monday, has a 15 percent palm oil content, up from 10 percent.

For the program, state-owned gas and oil firm Pertamina and petroleum and chemical distributor PT AKR Corporindo have secured contract with palm oil producers to buy 339,000 kiloliters (KL) of CPO from Aug. 17 until Oct. 31. This year, Pertamina plans to buy 765,000 KL of CPO this year for blending purpose and about 750,000 KL for non-subsidized diesel.

With the current price, BPDP is required pay a subsidy of Rp 2,600 per liter of the subsidized biodiesel because its retail price is far below its market price.

He also said that with the expected increase in the sales CPO for diesel blending purpose, the CPO price will increase, giving more benefits to producers.

The use of the funds would still be dominated by the biodiesel subsidies for now, although he said that it would also be allocated for revitalization and research to drive further development of the industry.

BPDP has also signed a memorandum of understanding (MoU) with PT Riset Perkebunan Nusantara to increase efficiency by providing high-quality seeds, maximizing the fertilizer, as well as developing new palm oil based products such as biolubricant and biodegradable plastic.

'€œAs our palm oil production will increase, we have to have the market, and it shouldn'€™t be limited to cooking oil. We need to find alternative products,'€ Bayu said. (fsu)

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