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Indonesia eases export rules further to 'flush out' palm oil stocks

Indonesia eases export rules further to 'flush out' palm oil stocks

FILE PHOTO: A worker fills jerrycans with cooking oil at a distribution station in Jakarta, Indonesia, May 20, 2022. REUTERS/Willy Kurniawan

JAKARTA :Indonesia is further easing rules to allow more companies to export palm oil, an official said on Friday, aiming to ease bottlenecks and swelling inventories caused by an export ban and regulatory changes implemented to maintain domestic supply.

The world's top palm oil exporter allowed palm shipments to resume from May 23 following a three-week ban designed to boost cooking oil stocks and keeping runaway prices in check amid growing domestic discontent.

But exports have been slow to restart, with confusion over procedural issues and new requirements for firms to join a government bulk cooking oil distribution programme, where a portion of their product goes to the domestic market before export permits can be granted.

Companies that have not joined the programme, however, will still be allowed to ship palm oil, providing they pay a $200 per tonne charge on top of the export tax and levy, senior minister Luhut Pandjaitan said on Friday.

Luhut said the latest concession was to "flush out" and reduce high palm oil inventories that have prevented refiners from buying more palm fruits from farmers, part of its new "acceleration programme".

Indonesia aims to export at least 1 million tonnes of palm oil products by July 31 under the scheme.

The easing is "a good step forward", an industry source said, adding the extra $200 charge was expensive and it remains to be seen how it would change exports.

Companies eligible for the programme might take the opportunity to reduce stock, said Eddy Martono, secretary general of Indonesia Palm Oil Association (GAPKI).

"Maybe their profits would be smaller, but it is better than keeping a full storage," he said.

Luhut also said the government would also allow companies to export five times the amount of palm oil they have sold domestically during a "transition period". That compares with a previous three times ratio.

The new export ratio and the acceleration scheme might help Indonesia exports near 2.5 million tonnes of palm oil in July, Eddy said, "if it goes well".

Prior to the export ban, the country typically exported between 2.5 million and 3 million tonnes of palm oil per month.

The finance ministry raised the maximum export tax for crude palm oil (CPO) to $288 a tonne for when government reference prices are above $1,500 per tonne, a regulation document reviewed by Reuters on Friday showed.

Previously the maximum export tax was $200 a tonne for when the CPO price was above $1,250.

Trade Minister Muhammad Lutfi said on Tuesday that while the maximum export tax would be increased, the export levy would be slashed so that the combined ceiling for both would be reduced to $488 per tonne from $575 per tonne to encourage shipments.

The reduction in the export levy has not yet been announced.

Below are the changes to export tax rates for CPO ($ per tonne):

CPO reference Pvs tax New tax rates

price rates

Up to 1,000 unchanged from

pvs structure

>1,000-1,050 93 124

>1,050-1,100 116 148

>1,100-1,150 144 178

>1,150-1,200 166 201

>1,200-1,250 183 220

>1,250-1,300 200 240

>1,300-1,350 250

>1,350-1,400 260

>1,400-1,450 270

>1,450-1,500 280

>1,500 288

Source: Reuters

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