JAKARTA, Sept 19 (Askume) – Indonesia, the world’s biggest palm oil exporter, will impose a new set of monthly taxes on rival edible oils to improve competitiveness, a Finance Ministry regulation showed on Thursday.
Under the new rules that came into effect on Saturday, crude palm oil export tax will be levied at 7.5% of the reference price regularly set by the government.
The documents show that more refined palm oil products will be subject to lower tax rates, ranging from 3% to 6% of the reference rate.
Indonesia currently imposes tariffs of $55 to $240 per tonne on crude palm oil exports, depending on a set of price limits based on monthly reference prices.
Paramalingam Supramaniam, director of Selangor brokerage Pelindung Bestari, said: “Of course, this will make Indonesian originators more competitive, especially in October. Malaysian originators need to lower their prices to compete.”
Malaysia is the world’s second largest palm oil exporter.
The finance ministry order said Indonesia made the changes to “enhance the competitiveness of palm oil and provide added value to farmers’ fresh fruit bunches”.
A government official had earlier said the changes were necessary as palm oil was losing its competitive advantage in competing with rivals such as soybean oil and sunflower oil.
The taxes are levied to help finance subsidies for small farmers and palm oil programs, such as the country’s biodiesel program.
