JAKARTA – The export tariff of palm oil should be able to maintain the balance between development of upstream and downstream palm oil industry. The sustainability of upstream and downstream palm oil industries will support the efforts of increasing the public welfare of six million smallholders in Indonesia.
“The export tariff should shore up the growth of upstream and downstream industries and also the welfare of oil palm smallholders,” the Indonesian Palm Oil Association (GAPKI) Chairman Joko Supriyono told Sawit Indonesia on Thursday, 27 May 2021.
To reach the balance, GAPKI has proposed the adjustment of palm oil export tariff stipulated in the finance ministry regulation (PMK) No.191/2020.
“The application of the export tariff is aimed to push up the development of both upstream and downstream palm oil industries. It is not intended to benefit more other business sectors while burdening the other ones,” said Joko Supriyono.
He said that the downside of the current system of palm oil export tariff is its too reliance on the export benchmark price (HPE) of crude palm oil (CPO). Actually, the tariff is aimed to support the mandatory biodiesel. The fund from the collection of export tariff is used to compensate the spread of fossil fuel prices and biodiesel prices. It means that it should be adjusted to the need of financing the biodiesel program.
Based on the need, the export tariff should be made in line with the need of the mandatory program of B30 that is currently being implemented. “Right now it is not ideal as the export tariff collection is based on the high price of CPO. As a result, a huge amount of fund has been derived from the export tariff collection. But in fact, the amount of collected fund is not in accordance with the need to finance the biodiesel program. The financing need of biodiesel and other programs is not that big amount,” he said.
Joko noted that currently there has been a huge surplus of fund collected from the export tariff. But the fund needed to finance the palm oil programs under the oil palm plantation fund management board (BPDKS) can be still fulfilled. A calculation can be made from the current price of CPO at the global market, which has now reached the average of US$1,200 per ton. With the price, it will be deducted by the export duty by US$255/ton and US$183/ton according to the government regulation. That means companies that export CPO will get US$762 per ton after being deducted with the palm oil levies and export duty.
“With the export duty, there is opportunity lost when the CPO price is high. Ideally, companies should be able to invest as they get higher margin,” said Joko.
Joko asserted that palm oil should not be burdened with too high duty. The amount of the duty should be also adjusted to the need of palm oil programs. It is aimed to enable the palm oil companies to invest and should not lose the opportunity to absorb workers.
“The adjustment of tariff should be based on the need of mandatory biodiesel, replanting of plantations and other palm oil programs. But we don’t agree with the annihilation of the export duty. Such duty collection is very supportive to the efforts of implementing the downstream policies, replanting of plantations owned by smallholders, and the positive campaigns to promote palm oil,” the graduate of the agriculture faculty of Yogjakarta-based Gajah Mada University said.
But he said that the duty system should be dynamic and flexible according to the condition of palm oil industry at home and abroad. There should be the right time to raise and decrease the tariff to ensure that all sectors of the industry can go hand in had and be sustainable.
Joko is optimistic that the adjustment of the export tariff will not affect the price of fresh fruit bunches (FFB). It is because the up and down of the FFB prices are determined by many factors, including the price of CPO at global market. “Right now, the increase of CPO price is not only influenced by the mandatory biodiesel program. But it is also influenced by the supply of other vegetable oils, such as soybeans and sunflower,” he said. (*)
Source: Sawit Indonesia | Featured image via theedgemarkets.com
