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Planned 10% levy could cause CPO exports to plummet, Gapki warns
The industry association has warned that increasing the export levy from currently 7.5 percent to 10 percent next year could make Indonesian CPO less attractive, especially in view of the government’s plan to launch the B40 biodiesel program in January amid stagnant production.
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Workers load fresh fruit bunches on April 27, 2022, at an oil palm plantation in Pekanbaru, Riau, for transportation to crude palm oil factories. (Reuters/Willy Kurniawan)
T
he Indonesian Palm Oil Association (Gapki) has warned that a plan to increase the levy on crude palm oil (CPO) exports to 10 percent next year could render local producers less competitive in the international market.
The government currently imposes a 7.5 percent levy on CPO exports, while a lower rate of between 3 and 6 percent of the reference price applies to refined palm oil products.
“Increasing the export levy will make Indonesian palm oil [exports] less competitive compared to neighboring countries,” Gapki chairman Eddy Martono said on Sunday, as quoted by Bloomberg Technoz.
Coordinating Economic Minister Airlangga Hartarto said on Dec. 19 that increasing the CPO export levy would help the government push forward with its mandatory 40 percent palm oil-based biodiesel (B40) program, which starts in January.
He added that the levy would be implemented once the Finance Ministry had issued the relevant regulation, Reuters reported.
The biodiesel program aims to reduce the country’s reliance on imported diesel while ramping up demand for domestically produced vegetable oils.
The government trialed the B40 biofuel in July to power trains, as well as cars and trucks using the currently available B35 biodiesel blend.
