Indonesia rules out changes to palm export tax structure

JAKARTA Wed Jan 16, 2013 2:18am EST

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JAKARTA Jan 16 (Reuters) - Indonesia, the world's biggest palm oil producer, will not change its export tax structure for the edible oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero, the trade minister said on Wednesday.

"Indonesian government will not change the palm oil export tax structure although Malaysia has been lowering its CPO export tax to zero percent," Trade Minister Gita Wirjawan said.

"We have set up a progressive palm oil export structure in line with our policy to boost the palm oil downstream industry," he added. "Although the Malaysian government has lowered its CPO export tax to zero percent, we will not be."

Malaysia, the world's No.2 palm oil producer, set at zero export taxes for crude palm oil for January and February after announcing last year that it would set duties -- formerly at 23 percent -- on a monthly basis.

The Malaysian tax changes were aimed at clawing back market share from Indonesia, which in 2011 slashed export taxes on refined palm oil in a bid to boost its processing and downstream industries.

Industry group the Indonesian Palm Oil Association (GAPKI) has repeatedly called for a reduction in palm oil export taxes to provide greater parity against Malaysian competitors.

But on the downstream and processing side, the Indonesian Vegetable Oil Association says it wants to keep things as they are to maintain consistency.

Indonesia reduced its export tax on crude palm oil to 7.5 percent for January from 9 percent in December.

Last month, a junior minister in Indonesia's trade ministry said his department was resisting pressure from parts of the palm oil industry to change its export tax system in response to planned tax cuts by Malaysia.

(Reporting by Yayat Supriatna, Writing by Michael Taylor; Editing by Miral Fahmy)

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