JAKARTA – The ministry of finance has decided to cut again the export duty of palm oil and derivative products to increase the Indonesian products’ competitiveness at the global market. It is contained in the finance ministry regulation (PMK) No.76/PMK.05/2021 on second revision of PMK No. 57/PMK.05/2020 on the tariff of the oil palm plantation fund management board (BPDPKS).
Finance Minister Sri Mulyani Indrawati said that the new export duty will be effective since 02 July 2021. “The palm oil export duty adjustment is a follow-up to the decision taken by the BPDPKS steering committee, which is led by economic coordinating minister and agriculture minister, finance minister, industry minister, trade minister, energy and mineral resources minister, state-owned enterprises (BUMN) minister, and national development planning minister as members,” Minister Sri Mulyani said in the press release on Tuesday, 29 July 2021.
The amount of export duty of palm oil products, including crude palm oil (CPO) and derivative products, is determined based on the reference price set by the trade ministry with the cut-off implementation since the date of export notification of the goods (PEB).
Based on the PMK No.76/PMK.05/2021, the upper limit to impose the progressive export duty is raised from previous US$670 per metric ton for CPO to US$750 per metric ton.
If the CPO price below or equal to US$750 per metric ton, its export duty will remain the same at, for example, US$55 per metric ton for CPO. “Then, for every price increase of CPO at US$50 per metric ton, the export duty will rise by US$20 per metric ton for CPO, and US$16 per metric ton for derivative products until the CPO price reaches US$1,000 per metric ton. If the CPO price exceeds US$1,000, the export duty will remain at the highest levels of export duties for each product,” BPDPKS President Director Eddy Aburrachman said in the press release.
He said that the revision of the export duty is aimed to increase the competitiveness of Indonesian palm oil products at the global market. But he said the decision was taken by considering the welfare of oil palm smallholders and the continuation of programs to develop Indonesian palm oil industry.
“The programs include the program to increase productivity through the replanting program of smallholders’ plantations, human resources development, research and development, expansion of domestic market through the national mandatory program of biodiesel, and promotions of palm oil,” he said.
With the new adjustment, all ad valorem taxes (export tax and export duty) of palm oil products and derivative products will decrease from the current 36.4 percent (maximum) of CPO price to the maximum of about 30 percent of CPO price. The reduction is expected to increase the competitiveness of Indonesian palm oil and derivative products at the international market.
The finance ministry claimed that the application of the export duty in 2020 and 2021 had proven not to cause the price reduction of palm fresh fruit bunches (FFB) from smallholders. The ministry said that the FFB price at the level of smallholders followed the price increase of CPO. During the period of January-May 2021, the average price of FFB received by smallholders was above Rp2,000/Kg.
“Besides, the government keeps its commitment to improve the smallholders’ welfare by allocating funds for smallholders’ replanting program to increase their productivity. The government is committed to replanting 180,000 Ha of smallholders’ plantations per year, by providing a fund of Rp30 million for every hectare of plantations under the replanting program,” the ministry said in the press release. (*)
Source: KOMPAS.com/Bisnis.com
