JAKARTA (Reuters) - Indonesia will set its export tax for crude palm oil (CPO) in February at $18 per tonne, up from $3 per tonne this month, the country’s trade ministry said on Friday.
The tax will be increased as the government’s reference export price for crude palm oil is seen rising above a threshold of $800 per tonne, the ministry said in a statement.
The government’s price reference is set at $815.52 per tonne for next month. An export tax of $18 per tonne is applied whenever the export price is between $800 and $850 per tonne.
The rising export tax may encourage planters to sell more of their products to domestic buyers, according to Indonesian Palm Oil Association (GAPKI).
“If the export tax is too high, maybe it won’t be attractive for exports. Domestic consumption could be larger for biodiesel,” said Fadhil Hasan, executive director of GAPKI.
Sahat Sinaga, executive director of the Vegetable Oil Industry Association, said imposing an $18 tax on top of a $50 per ton levy, will hurt competitiveness.
“It is like telling (companies) not to export,” Sinaga said.
Any sign that exports from the world’s largest palm oil producer are being reduced by the tax increase would support Malaysian benchmark palm oil futures.
On Friday, palm oil contracts for April on the Bursa Malaysia Derivatives Exchange were trading around 3,060 ringgit ($691) a tonne, down less than 1 percent.
The export tax for cocoa beans will be kept unchanged in February at 5 percent.
($1 = 4.4270 ringgit)
Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Kenneth Maxwell and Tom Hogue