TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
CPO export levy hike may jeopardize subsidized cooking oil supply
The recent export levy hike on crude palm oil (CPO) and its derivatives may tighten supplies of subsidized cooking oil brand Minyakita.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A port office at North Jakarta's Tanjung Priok Port prepares to deliver crates full of bottled Minyakita cooking oil to eastern Indonesia on March 3. The National Police launched a probe on March 9 into three producers of the state-subsidized cooking oil following reports that quantities being sold on retail shelves fell short of the amount mandated by policy. (Antara/Akbar Nugroho Gumay)
A
rise of export levy on crude palm oil (CPO) and its derivatives is expected to tighten supplies of subsidized cooking oil brand Minyakita, whose availability is tied to how much producers can ship palm oil products abroad.
Sahat Sinaga, chairman of the Indonesian Palm Oil Council (DMSI), said that a higher levy is putting more pressure on exporters who must fulfill their domestic market obligations (DMO) amid rising CPO prices, which have exceeded those of other vegetable oils, such as soybean oil.
"So far, they [exporters] have received an export multiplier incentive of 1 to 1.7 times for fulfilling DMO and Minyakita distribution, especially to eastern Indonesia. The increase in export levies has weakened incentives for Minyakita’s DMO [fulfilment],” he said, quoted by Kompas on Friday.
Read also: RI ups palm oil export levy to 10% as govt boosts biofuel, replanting efforts
The government requires exporters to set aside a certain amount of CPO to be produced as Minyakita to be sold at a regulated price deemed affordable for low-income earners. Companies will receive export permits only if they comply with supplying the Minyakita beforehand.
However, the government, starting May 17, raised its export levy on crude palm oil from 7.5 percent to 10 percent of the reference price 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.
