JAKARTA – The finance ministry’s fiscal policy agency (BKF) has stated that although the new palm oil export levy of 10% already implemented, the government remains open to opportunities of evaluating the export levy.
BKF Chairman Febrio Nathan Kacaribu made the statement in response to the letter sent by the Indonesian Palm Oil Association (GAPKI) to the finance ministry, complaining that the government’s decision to raise the palm oil export levy from 7.5% to 10% starting on Saturday (17/05/2025) will weaken the competitivness of Indonesia’s palm oil products at the global market. Currently, the palm export levy ranges from 3% to 7.5%. The fund collected from the palm export levy is used to finance a number of palm oil programs, which include the mandatory biodiesel program and replanting program of smallholders’ oil palm plantations.
“It’s a decision taken by the steering committee of BPDP (plantation fund management board). It’s been made effective, but we make it subject to evaluation,” Febrio told the press at Senayan office building of DPR on Monday (19/05/2025).
He said that considering the global condition and national interest, the government will need to evaluate the tariff policy to make adjustment to the new condition. “We’ll consider the global development, national interest and our downstreaming program. Certainly, we’ll keep doing evaluations,” he said.
Previously, GAPKI called on the government to delay the rise in palm oil levy as it will weaken the competitiveness of Indonesia’s palm oil products amid the uncertainties of the global market due to the trade war between China and USA and geopolitical tensions in a number of regions.
“Amid global market uncertainties and big risks caused by trade war and geopolitical tensions, raising the palm oil export levy risks weakening our competitiveness at the global market,” GAPKI stated in a letter sent to Finance Minister Sri Mulyani Indrawati on Friday (16/05/2025).
GAPKI Chairman Eddy Martono said the new export tariff will also further increase the export burden of Indonesia’s palm oil products. “Previously, our palm oil industry has been subjected to three export burdens — Domestic Market Obligation (DMO), export levy (PE), and export tax (BK). Total financial burden borne by the palm oil industry already reached US$221 per ton. The new tariff will certainly further increase the financial burden of palm oil exporters,” said Eddy.
Eddy said that the export tariff increase will also reduce the income of smallholders who are greatly susceptible to the price fluctuations of fresh fruit bunches (FFB) they sell. (*)
