The Indonesian government plans to implement the progressive export levy on crude palm oil from US$55 a metric ton of CPO to $180 per MT of CPO - Photo by GAPKI Secretariat Office

JAKARTA (TheInsiderStories) – The Indonesian government plans to implement the progressive export levy on crude palm oil (CPO) from earlier maximum US$55 a metric ton (MT) of CPO to as much as $180 per MT of CPO, showed by the finance ministry’ document. This policy has been taken in order to maintain the sustainability of the mandatory 30 percent biodiesel-used (B30) following the increase in world palm oil prices.

Last October, senior minister for economic affairs, Airlangga Hartarto, stated, “It has been decided, the palm oil export tax rate increased by $12.5 per MT and for downstream products, the tariff will increase by $10 per ton, with the assumption that each increase in the price of palm oil is $25 a MT.”

He revealed, the the world’ largest palm oil producer, is expanding its biodiesel program based on palm oil in order to cut the energy imports and to minimize the price difference between the biodiesel made from palm oil and a diesel price.

Hartarto said, when the B30 takes effect, is projected that the use of CPO will increases and push the prices up. He estimating the CPO use during the application of B30 will rise to around 3 million MT of CPO.

Accordance to Minister of Finance Regulation Number 23 of 2019, if the CPO price is above $570 a ton, a CPO and derivatives will be levied 50 percent. But, if the Prices above $620 a ton are subject to 100 percent full of levies. Last year, the country has implement zero export levy for palm oil products to protect the domestic palm oil industry from falling prices due to flagging exports and excess supply in the market.

In this month, the government set the reference prices for CPO dan derivative products for export at $782.03 per MT of CPO. The benchmark price is increased by 1.70 percent compared to October at $768.98 MT of CPO.

“(Because) the reference price has exceeded the threshold at $750 a MT, the government put an export levy $3 per MT in November,” said the director general at trade ministry office, Didi Sumedi, on Nov. 2.

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