September 24, 2019 / 4:24 PM / a month ago

Indonesia will not collect palm oil export levies until Jan. 1

JAKARTA (Reuters) - Indonesia will not collect palm oil export levies until Jan. 1, 2020, chief economic minister Darmin Nasution said on Tuesday.

Government rules state that levies of $10-$25 per tonne should be collected from palm oil exports when the reference price is above $570, with higher levies of $20-$50 per tonne when prices top $619.

Based on an estimate from the Trade Ministry, the palm reference price is at $574.9 per tonne, which means the government should start imposing levies next month, Nasution told reporters.

The delay is based on direction from the president, Nasution said, and reflects concern that levies might cut into farmers’ earnings.

“I cannot say for sure prices will increase (through to January), but if we implement levies now, the price farmers receive will be curbed,” he said.

Indonesia has not collected levies for palm since December 2018 due to low prices of palm oil.

The levies had been collected, besides export taxes, to raise funds for domestic biodiesel programme development, as well as palm research and a smallholder replanting scheme.

The least processed palm and palm kernel oils attracted higher levies to encourage companies to refine their oil onshore and create value before shipping them.

The government says it hopes higher demand will support palm prices due to next year’s implementation of the so-called B30 programme, which will have biodiesel with a 30% bio-content.

The mix will be increased from the current mandatory 20% bio-content in biodiesel and raise take-up of crude palm oil by an estimated 3 million tonnes, Nasution said.

Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Dale Hudson and Jason Neely

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