Palm Shell Exports Rising, But Hindered By Tax

Jakarta – The palm kernel shells from Indonesia have become a prima donna at the global market, especially in Japan, China, South  Korea, Taiwan, Thailand, and Poland.

The Indonesian Palm Kernel Shells Association (APCASI) reported recently that the palm shells are used as primary bio-energy source to generate power plants due to its high calorie. The Indonesian government has earned foreign exchange from the exports of palm shells at the average of US$250 million per year, and tax income of US$55 million per year during the last few years.

Based on data from APCASI, Indonesia’s production of palm shells has been continually increasing during the last decade. In 2019, its production of palm shells reached 9.97 million tons, with a total volume of export at 1.72 million tons or around 17.25 percent of the total production.

Indonesia produces crude palm oil (CPO) at the average of 48 million tons per year. The CPO production is around 23 percent of the fresh fruit bunches (FFB), while the palm shells are usually around 5-6 percent from the total FFB.

APCASI Chairman Dikki Akhmar said that the palm kernel shells have a very big potential for exports. “Almost 30% of palm shells in a number of palm oil producing regions are not used and also cannot be exported,” he said.

He added that they only export palm shells from remote areas, where the palm shells are not used by the palm oil mills or other local industries. “So, our exports of palm shells have not affected the need of biomass at local market,” he noted.

He asked the Indonesian government to separate the export tax policy of the palm shells from the export tax policy of CPO and other palm oil derivative products. It is because the policy of CPO price is not relevant with the export price of palm shells.

“We understand that we have to pay taxes, but uncontrolled policy and too high taxes will hinder exports of palm shells. This is not to mention the fact that the amount of palm shell tax has been always changing, causing the unstable prices of palm shell exports,” he said.

According to Dikki, as of June 2020, Indonesia’s exports of palm kernel shells to Japan alone reached 800,000 tons with a total value of USD84 million.

“We predict that until the end of 2020 there will be a decrease, so that the export will only reach 1.2 million tons. It is because the high export tax of palm shells and the high export duty of palm oil that reaches USD22 per ton,” he said in Jakarta recently.

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