The Indonesian government will probably increase its export tax and could enforce discount selling if palm oil prices remain high, the chairman of palm oil producer REA Holdings told Reuters.
"If the cooking oil price remains above the level that's politically acceptable I think there will be an export duty increase on palm oil," REA's non-executive chairman Richard Robinow said by phone on Thursday.
In the leading port for palm oil exports, crude palm oil traded at 6,823 rupiah ($0.760) a kilo, or $760 per tonne, on Thursday. Last week it hit record highs of over $850 per tonne. The acceptable price in Indonesia for palm oil, used to making cooking oil, is around $630 per tonne, Robinow said.
He added that prices had been boosted by lack of cooking oil in Java. "If this is sorted by the market price coming down or the discount sales working on a voluntary, or a semi-voluntary basis, then the export duty may not happen." "But we're all in the dark at the moment. We haven't heard anything official," he said.
Reuters reported on June 6 that a new subsidy programme - under which palm oil firms are being urged by the government to sell some palm oil locally at a discount to market prices - was being introduced to make cooking oil more affordable for local people. REA is already selling 5 percent of its palm oil locally at a discount - around $630 per tonne - to avoid further measures by the government, Robinow said.
The government also said last week it was considering raising the export tax on palm oil producers to 6.5 percent. The new discount selling programme - of which REA has so far only received details from local industry association GAPKI - could be made compulsory, or the amounts increased, if the prices of palm oil remain high or some producers flout the guidelines, Robinow said.