Jakarta — Indonesia’s trade ministry is resisting pressure from parts of the palm oil industry to change its export tax system in response to planned tax cuts by rival producer Malaysia, a junior minister said today.
A proposed cut in crude palm oil (CPO) export taxes by number two producer Malaysia due to come in next year will make it easier for refiners or producers to ship out CPO when margins for refined palm oil are low.
Malaysia’s tax move came almost a year after Indonesia, the world’s top producer of the edible oil, reduced export taxes on refined palm oil to boost its processing industry.
The Indonesian Palm Oil Association (GAPKI), which represents mostly plantation firms, has called for a reduction in palm oil export taxes to provide greater parity against Malaysian competitors.
“GAPKI has been proposing that the government changes the palm oil export tax structure,” Deputy Trade Minister Bayu Krisnamurthi said, adding that the proposal had not been discussed with other ministries.
“The trade ministry has suggested not changing the export tax scheme, but to invest in infrastructure such as on storage tanks and increase domestic palm oil consumption.”
The Malaysian government, in a bid to entice customers, said it plans to cut export taxes for the crude grade to 8-10 per cent from 23 per cent early next year.
Indonesia has set its December export tax for CPO at 9 per cent and 3 per cent for RBD palm olein.
On the downstream and processing side of the industry, the Indonesian Vegetable Oil Association says it wants to keep things as they are to maintain consistency in the business.
Last week, Achmad Suryana, director general at the agency for food security in the Indonesian ministry of agriculture, said initial talks had started between different ministries but no decision had been made.
“A technical team has started talking about the possibilities and what is best for Indonesia,” Suryana said, at a palm oil conference in Bali, adding that discussions would involve the agriculture, trade and finance ministries.
There was not timetable given for a decision.