Indonesia to Impose 3% Export Tax On Crude Palm Oil Starting in January

Indonesia, the world’s biggest producer of crude palm oil, will impose a 3 percent tax on exports of the commodity starting in January to ensure domestic supplies.

The increase, the first in six months, lifts the tax rate from zero and was based on the average price in Rotterdam exceeding $769.17 a metric ton over a four-week period, Diah Maulida, director general for foreign trade at the Trade Ministry, said on Tuesday.

The Indonesian government reviews the export tax every month to ensure local supply and reduce volatility in cooking oil prices.

“Exports of palm oil may slow down a bit next month following the tax decision,” Sahat Sinaga, second deputy chairman of the Indonesian Palm Oil Board (DMSI), said during a telephone interview.

Crude palm oil “will make up around 70 percent of total exports as the duties for derivative products is higher,” Sahat said.

Palm oil shipments may exceed 1.4 million tons this month, up from 1.25 million tons in November, before dropping to 1.2 million tons in January as exporters boost delivery to avoid paying the tax, Susanto, marketing head of the Indonesian Palm Oil Producers Association (Gapki), said on Thursday.

Indonesia has set export duties based on the average price in Rotterdam since last year.

The country imposes a 1.5 percent duty on overseas shipments of crude palm oil if the average price reaches at least $700 per ton and a 3 percent tax if it ranges between $751 and $800. The tax can rise to a maximum of 25 percent if the price reaches $1,250 per ton.

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