AreaIndonesia
Commodity GroupOilseeds, oils and meals
CommodityPalm oil
Date01/10/2014
Policy CategoryTrade
Policy InstrumentExport tax
DescriptionSuspended variable export tax on crude palm oil for the months of October and November.
NotesFollowing sharp drops in domestic palm oil prices, the government decided to suspend the countrys 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 governments decision followed a similar move, in September, by rival exporter Malaysia. Prior to the suspension, Indonesias 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.
