Indonesia began relaxing levies on palm oil exports on 5 December to stimulate trade, the Indonesian Ministry of Finance announced.
According to Free Malaysia Today, Indonesia will not collect levies from palm exporters when prices are below a threshold of US$570 (RM2,370) /tonne, but will charge US$10-$25 once prices are in a range of US$570-$619 per tonne. The range will rise to US$20-$50 when prices rise above US$619/tonne.
Under previous rules, exporters had to pay US$20-$50/tonne regardless of the palm oil prices.
Asia Pacific Exchange (APEX) said Indonesia’s export tax was mainly used to subsidise the price difference between biodiesel and petrochemical diesel oil, and the replanting of oil palm trees by farmers.
“The government hopes to increase the income competitiveness of exporters by reducing taxes, thereby helping local palm growers increase their income. This also reflects the huge pressure on domestic stocks in the producing countries and the government is eager to ease inventory pressure by boosting exports.”
The tariff removal is temporary until the product recovers to US$500/tonne.
Palm oil prices have remained down 25% since the start of 2018 as a result of a large growth in Malaysian and Indonesian production area.