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Indonesia finally imposes palm oil export levy

July 17, 2015

A start date for Indonesia’s long-awaited palm oil export levy has finally been set for Thursday 16 July, Reuters reported.

, Indonesia finally imposes palm oil export levy

The levy was first announced in March and had been delayed multiple times due to ‘administrative issues’, Reuters said. The delays made it difficult for traders to set prices and doubts were raised on whether planned biodiesel subsidies would be successfully generated by the levy.

The export tax places a charge of US$50/tonne on crude palm oil and US$30/tonne for processed palm product shipments.

Government officials told Reuters that 4.5tr Indonesian rupiah (US$340M) would be generated by the levy this year, and 10tr Indonesian rupiah (US$750M) was expected annually after that.

Part of the levy’s proceeds would be used to fund Indonesia’s biodiesel subsidies, the report said. The subsidies were introduced to help Indonesia cut its import bill and absorb any excess palm oil. Bayu Krisnamurthi, chief executive of the finance ministry’s Indonesia Estate Crop Fund, told reporters on Tuesday that results from the subsidy had been calculated: “We will give 600-700 rupiah (US$0.04) subsidy per litre for biodiesel,” he said.

 


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