Indonesia relaxes palm oil levy rules

JAKARTA: Indonesia has relaxed rules on palm oil levies and derivative products e f fe c t ive immedi at ely following a drop in prices, according to a finance ministry regulation uploaded on a government website on Wednesday.

The world’s top exporter of palm oil will not collect levies from palm exporters when prices are below a threshold of U$ 570 ( RM2,370) per tonne, but will charge US$ 10- US$ 25 a tonne once prices are in a range of US$ 570- US$ 619 per tonne. The levy will rise to US$ 20- US$ 50 when prices hit above US$ 619 per tonne.

Under the previous rules, exporters paid US$ 20- US$ 50 per tonne regardless of palm price levels. The rules for export taxes remain the same.

The detai ls of the new regulation were dif ferent from those announced last week. Darmin Nasution, coordinating minister for economic affairs, earlier said the zero levy is implemented when prices are below US$ 500 per tonne.

The government wi l l use the trade ministry’s monthly reference price in deciding the levy, according to the regulation signed on December 4, which is set based on palm prices in Indonesia, Malaysia and Rotterdam.

Trade Ministry’s reference price for December stood at US$ 549.37 per tonne.

Indonesia collects levies from palm exporters to help f inance the development of its palm- based biodiesel p r o g r amme and fu nd replanting.

Nasution said last week, a rapid drop in palm prices has made it “urgent” for the government to take action, especially to help palm farmers.

Palm benchmark contract in Bursa Malaysia hit its lowest level since August 2015 last week, as stocks of the vegetable oil continue to remain elevated amid soft global demands.

“This is a good move ( for Indonesia) but bad for Malaysia as we need to compete with them,” said David Ng, derivatives specialist at Phillip Futures in Kuala Lumpur.

“Indonesian crude palm oi l is now priced more competitively,” he added. — Reuters