Indonesia duty hike will cause CPO exports to plummet

The Indonesian Palm Oil Association (Gapki) has warned that a plan to increase the duty on crude palm oil (CPO) exports to 10% next year could make local producers less competitive in the international market.

The government currently levies a duty of 7.5% on CPO exports, while a lower rate of 3 to 6% of the base price is applied to refined palm oil products.

“The increase in export duty will make Indonesian palm oil exports less competitive compared to neighboring countries,” Gapki Chairman Eddy Martono said on Sunday. Coordinating Minister for Economy Airlangga Hartarto had earlier said the CPO export duty increase would help the government move forward with the mandatory 40% palm oil-based biodiesel (B40) program, which starts in January, The Star quoted him as saying.

However, industry associations are concerned that the revamped biodiesel program, coupled with a higher levy, will result in lower overall CPO exports, especially amid stagnant domestic production.

Earlier it became known, Malaysia raised the export duty on CPO for the first time in three years to 9.5%.

Tags: Indonesia, prices, palm oil, export