JAKARTA (theinsiderstories.com) – The Indonesia government has launched the so-called Palm Oil Fund Management Agency which has the main duties of managing levies paid by palm oil companies. The funds will be used to support palm oil sustainability programs, including boosting biodiesel production in the country.
The new body will start collecting the crude palm oil (CPO) levies starting from July 1, 2015. The agency has the potentiality to generate around Rp 8 trillion ($601.50 million) of funds per year.
Coordinating Minister for Economic Affairs Sofjan Djalil said the government plans to impose levy of US$50 per metric ton on palm oil exports and around $10 - $40 per metric ton for palm oil derivative product. He added the government has also appointed executive board members of the agency.
Former Deputy Minister for Trade Bayu Khrisnamurti has been appointed as Chief Executive of the Funds Management Agency.
Minister Djalil said the funds will be used to increase the production of palm oil farms owned by the people. According to the government data, there are around 4 million hectares of palm oil estates owned by the individual farmers that only produce 2.5 tons of fresh fruit bunches (FFBs) per hectare, meanwhile palm oil estates owned by corporates produces at an average of 5 tons per hectare.
In May this year, President Joko Widodo has signed a presidential decree which provides legal basis for the establishment of the new body, which regulates the amount of levy, tax incentives and other supporting rules to implement the decree.
The decree said the government will levy all CPO exporters at a zero export tax rate as long as the price below $750 metric ton of palm oil.
Finance Minister Bambang Brodjonegoro said that all of the policy packages are expecting to help reduce current account deficits and help support the palm oil industry players who have been hit by lower CPO prices since last year.
Indonesia has set the CPO export tax at zero percent level since October 2014. The tax can increase to a maximum of 22.5 percent, depending on the price of CPO.
Biodiesel consumption is expected to reach 3.5 million kiloliters (KL) in 2015, down from an initial target of 5.3 million KL. Industry players estimate that the Indonesia’s CPO production is expected to increase by 7 percent to 31.5 million tons this year, with exports expected to fall by 500,000 tons to 19.5 million tons.
Major palm oil firms operating in Indonesia include PT Sinar Mas Agro Resources and Technology, Malaysia’s Sime Darby and Singapore-based Wilmar International Ltd.
Following is the organizational structure of the Palm Oil Fund Management Agency:
Advisory Board
- Chairman of Advisory Board: Coordinating Minister for the Economy
- Members: Finance Minister, Agriculture Minister, Industry Minister, Trade Minister, Energy and Mineral
- Resources Minister (ESDM), T.P. Rahmat, Martias, Prijono Sugiharto, Secretary General of Apkasindo and former Deputy Finance Minister Mahendra Siregar.
Supervisory Board
- Chairman of Supervisory Board: Rusman Heriyawan
- Secretary of the Supervisory Board: Secretary of the Coordinating Minister for the Economy
Members:
- Chairman of the Fiscal Policy Agency (BKF)
- Special Staffs of Trade Minister
- Director General of Agriculture Minister
- Director General for New, Renewable Energy and Energy Conservation of the Energy Ministry
- Director General for Agro Industry at the Industry Ministry
- Chairman of GAPKI
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