Indonesia may lower the threshold price for taxing crude palm oil exports from $700 per tonne in order to discourage exports of the commodity and ensure adequate domestic supplies, an official said on Monday. There is a possibility that we may impose tax even if the reference price is lower than $700" per tonne, said Bayu Krisnamurthi, a deputy to the chief economic minister.
While Indonesia is expected to produce a surplus of 15 million tonnes of palm oil this year, he said that the rise in palm oil prices and weak rupiah currency could tempt producers to sell more palm oil abroad, threatening domestic supplies.
Under the existing regulation, Indonesia does not tax palm oil exports until the minimum taxable price, called the minimum reference price, hits $700 a tonne. The government has kept the export tax at zero for April as the reference price, which is the average spot price of crude palm oil in Rotterdam, Europes vegetable oils market, during the preceding month, was $588.38 per tonne.
Last Friday, the Rotterdam spot price was $642.50 per tonne. The worlds top producer of palm oil may produce about 20 million tonnes of crude palm oil this year, with domestic consumption seen at around 4.5-4.7 million tonnes, Krisnamurthi said.