Indonesian CPO Not Competitive

TEMPO.CO, Jakarta - The government had raised the export duty for crude palm oil (CPO) from 10.5 percent to 13.5 percent. A number of producers claim that the increase will lower Indonesian CPO's competitiveness—particularly against main competitor Malaysia.

Malaysia has a CPO export duty of just 5.5 percent. "This means that they can sell their CPO at a lower price than Indonesia," said Joko Supriyanto, Secretary General of the Indonesian Palm Oil Association (Gapki), yesterday.

Based on the Finance Minister Regulation No. 223/PMK.011/2008, CPO export duty applies progressively in accordance with market price development. The lowest rate reached 7.5 percent at around US$750 to US$800 per ton, while the highest level reached 22.5 percent for prices above US$1,250 per ton.

Trade Ministry's PR chief Ani Mulyati yesterday said that the export duty hike is an adjustment to the soaring price of crude palm oil in international markets. "The CPO reference price for April was US$972.88 per metric ton," she said. Last month, the CPO export reference price stood at US$851.39 per metric ton.

Joko said the government also needs to consider India's new import duty for downstream palm oil products, which was recently raised from 7.5 percent to 10 percent. "So to enter India, Indonesia will be taxed in both upstream and downstream," he said.

The Indian government raised its import duty for downstream palm oil products following a significant import surge to 172 percent in November 2013. India meets more than half of its cooking oil demand from imports. For raw materials, India buys palm oil from Indonesia and Malaysia, while their soybean oil are imported from the United States, Brazil, and Argentina.

PINGIT ARIA