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Indonesia lowers palm oil levy to boost exports
Indonesia rolled out a new rule on Thursday that imposes a 7.5 percent levy on CPO exports to increase the commodity's global competitiveness amid declining demand relative to other vegetable oils.
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A worker hauls fresh fruit bunches (FFB) on May 12, 2022 at a plantation in Namorambe, Deli Serdang regency, North Sumatra. (AFP/Andi)
T
he government is poised to introduce a new rule that lowers levies on palm oil exports, in a bid to increase the key commodity’s competitiveness against rival edible oils in the global market.
The Finance Ministry plans to impose a levy amounting to 7.5 percent of the reference price for crude palm oil (CPO) exports, effective three days after the new rule's introduction on Sept. 19.
The new rule cuts the levy on CPO exports from US$90 to $63 per tonne.
The export levy for both palm kernel and palm kernel meal is set at $25 per tonne, while lower levies ranging 3-6 percent of the country’s CPO reference prices apply to more refined palm oil products, according to the regulation posted in the Finance Ministry's website.
Indonesia charges export tax and additional levies on CPO, with the reference rate calculated using a weighted average of palm oil prices as set by the Trade Ministry.
The CPO reference rate is set on a monthly basis in United States dollars.
The levies on CPO exports are crucial for funding Indonesia's palm oil initiatives, such as smallholder replanting programs and the subsidized biodiesel program.
