The government has decided to suspend an export tax imposed on crude palm oil (CPO) and its derivative products until next year to ease the financial burdens of palm oil producers amid a drop in CPO prices on the world market.
Economic Coordinating Minister Darmin Nasution, said in Jakarta on Tuesday that the export tax was suspended until January next year as the government officially begins the implementation of its mandatory B-30 biodiesel program.
Darmin said he hoped the implementation of the B-30 biodiesel policy, which was supposed to significantly raise the demand for palm oil, would be able to push up palm oil prices in the domestic market. He said that the suspension of the export tax had been approved by President Joko “Jokowi” Widodo.
Based on a 2019 Finance Ministry regulation, the government would have imposed an export tax of up to $25 per ton if prices hovered between $570 and $619 per ton and up to $50 if it goes beyond $619 per ton.
As of Sept. 20, the CPO price was at $574.9 per ton and it is expected to slightly fall to $570 per ton until the end of this year.
The minister therefore called for the revision of the regulation to allow for the suspension of the export tax because, if based on the above price formula, it was still applicable.
In 2018, a similar slump in crude palm oil (CPO) prices also prompted the government to suspend the export levy.