JAKARTA—Indonesia will slash its combined maximum crude palm oil export and levy rate to $488 per metric ton from $575 to encourage shipments, Trade Minister Muhammad Lutfi said on June 7.
Indonesia, the world’s biggest palm oil producer, has allowed palm oil exports to resume after a three-week ban, although progress has been slow due to red tape, keeping palm mills’ storage tanks full.
Farmers have complained that prices of palm fruits remain low because mills are still limiting their purchases.
The government would raise the maximum tax to $288 per metric ton, but lower the maximum levy to $200, Lutfi said. Indonesia currently charges a maximum of $200 per metric ton for export tax and a maximum of $375 for the levy.
Lutfi didn’t specify when the new fees will be imposed.
The current total tax and levy charges are “burdensome,” Trade Ministry senior official Oke Nurwan told reporters. “Exports must flow, because storage tanks are full.”
Indonesia banned the export of crude palm oil and some of its derivatives from April 28 for three weeks in an effort to control soaring domestic prices of cooking oil, made from palm oil.
To ensure a secure domestic supply of palm oil after the ban was lifted, the government has put in place a policy stating that producers must sell a portion of their products to the local market before they are granted export permits.
Industry groups have requested that the government allow a bigger export quota during the transition period to free up storage, after a number of palm oil mills stopped buying palm fruits from farmers.
Asked about the request, Lutfi said they are reviewing the proposal. He said companies are allowed to export five times the amount they have sold locally.
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