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RI ups palm oil export levy to 10% as govt boosts biofuel, replanting efforts
The government is slated to raise its export levy on crude palm oil from 7.5 percent to 10 percent of the reference price starting May 17 to fund a biofuel program and replanting efforts.
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National commodity: Workers load palm oil fresh fruit bunches on April 27, 2022, to be transported to CPO factories in Pekanbaru, Riau province. (Reuters/Willy Kurniawan)
T
he government is slated to raise its export levy on crude palm oil from 7.5 percent to 10 percent of the reference price starting May 17 to fund a biodiesel program and replanting efforts.
The world’s largest palm oil producer also increased levies for outbound shipments of other palm oil products, according to a regulation issued by the Finance Ministry on May 14.
Indonesia is heavily subsidizing biodiesel to meet its mandatory 40 percent biodiesel (B40) policy targets using export levy collection to make up for the high cost of turning palm oil into fuel, especially given the wide price gap between palm oil and crude oil.
Eddy Martono, chairman of Indonesia's Palm Oil Association (GAPKI), expected that the increasing CPO export levy would make Indonesian palm oil less competitive globally.
“Our palm oil is now priced higher than neighboring countries,” Eddy said on Wednesday, as reported by Bisnis.
He explained that the industry is already facing major burdens, including the domestic market obligation (DMO) for cooking oil as well as the export levy and the export duty. The total cost of the three components reached US$221 per metric tonne.
“The figure was based on a CPO price of Rp 14,000 [84 US cents] per kilogram. We have yet to calculate the additional burden resulting from the new 10 percent levy,” he said, as Bisnis reported.
