Palm Oil Fund Levy Effective From July 1


JUNE 16, 2015

Jakarta. The Indonesian government will start imposing a crude palm oil levy from July 1 — a month later than originally planned — as part of its efforts to develop a local biodiesel industry, a key minister has said.

Local palm oil producers will have to pay between $10 to $50 for each ton of crude palm oil or its derivative products shipped abroad, Coordinating Minister for Economic Affairs Sofyan Djalil said on Monday.

A newly established entity, called the Palm Oil Fund Management Agency, will be responsible for collecting and managing the funds raised. The money will be used for the development of a sustainable palm oil industry and to support biodiesel production in Indonesia

Indonesia waived its export tax on palm oil in October last year, as the commodity's price dropped below $750 per ton. The export tax could be as high as 22.5 percent.

The government needs extra money to develop the domestic biodiesel industry and it needs to curb CPO exports in order to provide local biodiesel producers with enough raw materials — hence the levy, said Rusman Heriawan, who heads the Palm Oil Fund’s supervisory board.

Rusman said that 40 percent to 70 percent of the raised funds will support development of a local biodiesel industry, in order to make the fuel cheaper than oil-based diesel.

The government has already increased its biodiesel subsidies and increased the minimum bio content in the fuel to 15 percent, in order to reduce expensive oil fuel imports.

Bayu Krisnamurti, the former deputy trade minister, will head of the Palm Oil Fund.

Investor Daily