Trade and markets
 

Detail

Area
Indonesia
Commodity Group
Oilseeds, oils and meals
Commodity
Palm oil
Date
01/10/2014
Policy Category
Trade
Policy Instrument
Export tax
Description
Suspended variable export tax on crude palm oil for the months of October and November.
Notes
Following sharp drops in domestic palm oil prices, the government decided to suspend the country’s variable export tax on crude palm oil for the months of October and November. The measure aims to stimulate exports, thereby bringing down domestic stock levels and halting the current decline in prices. The government’s decision followed a similar move, in September, by rival exporter Malaysia. Prior to the suspension, Indonesia’s exports were charged a 9% levy. The last time the tax was set at zero was in December 2009. One reason behind the recent surge in palm oil stocks has been lower than expected uptake by the local biodiesel industry. Apparently, the implementation of mandatory blending of diesel with palm-oil based biodiesel has fallen considerably behind schedule (see also MPPU Mar. & July ’14). With a view to raise domestic demand for palm oil, the government now plans to make 10% blends (B10) available nationwide by the end of this year, while the shift to B20 is envisaged for the year 2016.