Satria Sambijantoro and Linda Yulisman, The Jakarta Post, Jakarta | Business | Tue, April 07 2015, 7:45 AM
\nIndonesia is considering extending the imposition of export levies for palm oil to other commodities such as rubber and coffee, in an effort to boost the country\u2019s domestic agriculture industry.
\n\u201cThe export levy could also be applied to rubber, coffee and other commodities, depending on the situation,\u201d Gamal Nasir, the Agriculture Ministry\u2019s director general for plantations, said on Monday.
\n\u201cHowever, for now, it will be for crude palm oil [CPO] first,\u201d he said after a meeting with top officials at the Office of the Coordinating Economic Minister.
\nThe government has revealed a plan to introduce export levies for palm-oil exporters that will be used primarily to fund the government\u2019s biodiesel program \u2014 intended to lower fossil-fuel imports and reduce the country\u2019s current-account deficit \u2014 as well as for replanting and research programs in local plantations.
\nUnder the government\u2019s plan, palm-oil exporters would be levied US$50 per metric ton for CPO shipments and $30 for processed palm-oil products.
\nThe government will keep imposing other taxes on CPO shipments when prices exceed $750 a ton, with the tax rates ranging between 7.5 percent and 22.5 percent for higher prices.
\nPalm-oil prices have soared following the Indonesian government\u2019s export levy plan, with the commodity\u2019s futures climbing 1.8 percent to $614 per ton, the strongest level in almost a month, on the Bursa Malaysia Derivatives in Kuala Lumpur on Monday, Bloomberg reported.
\nIn a research note distributed on Sunday evening, analysts from CIMB Group estimated that the palm-oil exports levy policy could provide the government with at least $885 million of additional revenue and could potentially subsidize 2.5 million tons of biodiesel at Rp 4,000 per liter.
\nCoordinating Economic Minister Sofyan Djalil estimated the levy plan would generate approximately
\nRp 5 trillion to 7 trillion of funds. The government\u2019s biodiesel subsidies program might need at least
\nRp 5 trillion, he said on Monday.
\nHe confirmed the plan to impose the levy on other commodities such as rubber and coffee, but added that the government would not implement the policy hastily.
\n\u201cIf this one succeeds, then we could implement the same thing for rubber,\u201d Sofyan said after the meeting.
\n\u201cBut, the nature of businesses is really different [between the two industries]. Implementing it for crude palm oil, for example, may be easier as there would be no problem if we implemented a $50 levy there,\u201d he noted.
\nGandi Sulistiyanto, the managing director of major palm-oil producer Sinar Mas Group, said that the industry welcomed the government\u2019s measure to charge export levies, which would be pooled as a fund by a steering committee supervised by a board consisting of government and business players.
\n\u201cThe fund is a support from the upstream industry to the downstream industry, particularly the biodiesel industry,\u201d he said.
\nMajor palm-oil producers estimated that the rising consumption of CPO for biofuel blending would not affect the supply of cooking oil domestically.
\nIn February, the government increased the biofuel subsidy to Rp 4,000 per liter from the previous Rp 1,500. Beginning in April, the content of mandatory biofuel for diesel blending has also been increased to 15 percent from 10 percent.
\n\u201cThe CPO supply allocated for biodiesel will derive from excess output which up to the present is exported,\u201d producers, including Wilmar, Sinar Mas and Musim Mas, among others, said in a statement.
\nDomestic palm-oil consumption will total 10 million tons this year, half of which is to be used for biodiesel, according to Trade Minister Rachmat Gobel.
\nLink:
\nhttp:\/\/www.thejakartapost.com\/news\/2015\/04\/07\/palm-oil-levy-could-be-extended-rubber-coffee.html
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