Corresponding to the increase in international demand for Indonesian palm oil, the Ministry of Industry has indicated that the export duty imposed on crude palm oil will be increased.
According to Benny Wachjudi, the Director General of Chemical and Agricultural Industries, the domestic retail prices of crude palm oil products will be held constant; the government will guarantee this (Bisnis Indonesia, 28 March 2010). Meanwhile, addressing concerns that the increased export duty would hurt the international competitiveness of crude palm oil from Indonesia, Mr. Wachjudi referred to a recent study by the Ministry of Industry that - essentially - indicated that the level of international demand for crude palm oil is practically unlimited, or at least will not be negatively affected by an increased export tariff set by Indonesia. In fact, he pointed out that in order to protect supply-demand consistency, India reduced its import tariff on Indonesian crude palm oil by 40% to accommodate to Indonesia’s increased export duty, absorbing both the product and the opportunity cost.
As contained in Minister of Finance Regulation No. 223/PMK.011/2008 on the Determination of Exports Subject to Export Duty, the determination of crude palm oil tariffs will be on the basis of the price per ton in the Rotterdam commodity market, with different export tariffs corresponding to different price ranges in that market. Whereas the previous tariff was based on the USD 701 - 750 ‘bracket,’ the current price of USD 752 on the Rotterdam commodity market has given cause for an increase in the export tariff: it is expected to be raised to 4.5% in April by the Director General of Customs and Excise, in procedural accordance with the aforementioned Minister of Finance Regulation.
It would seem that many stakeholders in the palm oil industry share the optimism expressed by Mr. Wachjudi, and in fact a representative of the Association of Indonesian Palm Oil Entrepreneurs, Fadhil Hasan, ventured to Bisnis Indonesia (28/3) that export levels will only continue to increase throughout 2010.
This ILB is based upon research conducted by the hukumonline team.
Corresponding to the increase in international demand for Indonesian palm oil, the Ministry of Industry has indicated that the export duty imposed on crude palm oil will be increased.
According to Benny Wachjudi, the Director General of Chemical and Agricultural Industries, the domestic retail prices of crude palm oil products will be held constant; the government will guarantee this (Bisnis Indonesia, 28 March 2010). Meanwhile, addressing concerns that the increased export duty would hurt the international competitiveness of crude palm oil from Indonesia, Mr. Wachjudi referred to a recent study by the Ministry of Industry that - essentially - indicated that the level of international demand for crude palm oil is practically unlimited, or at least will not be negatively affected by an increased export tariff set by Indonesia. In fact, he pointed out that in order to protect supply-demand consistency, India reduced its import tariff on Indonesian crude palm oil by 40% to accommodate to Indonesia’s increased export duty, absorbing both the product and the opportunity cost.
As contained in Minister of Finance Regulation No. 223/PMK.011/2008 on the Determination of Exports Subject to Export Duty, the determination of crude palm oil tariffs will be on the basis of the price per ton in the Rotterdam commodity market, with different export tariffs corresponding to different price ranges in that market. Whereas the previous tariff was based on the USD 701 - 750 ‘bracket,’ the current price of USD 752 on the Rotterdam commodity market has given cause for an increase in the export tariff: it is expected to be raised to 4.5% in April by the Director General of Customs and Excise, in procedural accordance with the aforementioned Minister of Finance Regulation.
It would seem that many stakeholders in the palm oil industry share the optimism expressed by Mr. Wachjudi, and in fact a representative of the Association of Indonesian Palm Oil Entrepreneurs, Fadhil Hasan, ventured to Bisnis Indonesia (28/3) that export levels will only continue to increase throughout 2010.
This ILB is based upon research conducted by the hukumonline team.
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