JAKARTA: Indonesia raised its palm oil export tax for the first time since October 2014, a move that threatens to dent shipments and export revenues from the world’s top producer of the edible oil.
Indonesia will set the crude palm oil (CPO) tax at $3 per tonne in May, Nurlaila Nur Muhammad, the director of export of agriculture and forestry products at the Trade Ministry, said on Wednesday.
Indonesia raised the tax based on the assumption of a CPO reference price of $754.10 a tonne in May, up from $682.32 in April, Nurlaila said. When palm oil prices exceed $750, Indonesia’s CPO exports are subject to a dollar tax rate running from $3 to $200 per tonne, as well as a separate $50 a tonne export levy.
Palm oil is Indonesia’s third-biggest source of export revenue after oil and natural gas shipments and coal. But, the value of the country’s palm shipments has fallen, slipping 12 percent in 2015 to the lowest since 2010, central bank data shows.
The new tax could further aggravate a slump in Indonesia’s overall export revenues, which have contracted over the last 18 months.
Global palm oil buyers may look to cheaper Malaysian supplies instead, Alan Lim, plantations analyst at MIDF Research told Reuters.
Malaysia has set its May export tax at 5 percent of 2,500 ringgit ($639.06), or about $32 a tonne, significantly less than the $53 export levy and tax in Indonesia, noted Lim.
“Buyers and sellers will take this into consideration,” he said.
Benchmark palm oil futures in Malaysia, the world’s second-biggest producer, dipped on Wednesday as the ringgit recovered from a one-week low against the dollar, while expected demand ahead of Ramadan was seen limiting losses.
Indonesia’s March exports of palm oil and palm kernel oil fell 24 percent to 1.74 million tonnes from the previous month, while production slid 6.4 percent over the same period, data from the Indonesian Palm Oil Association (GAPKI) showed.
Palm oil exports from Indonesia were worth a total of $15.4 billion in 2015, while 2010 were worth $12.9 billion, Bank Indonesia data showed.
