Indonesia curbs palm oil shipments

JAKARTA: Indonesia will raise taxes on palm oil exports in February in the first increase in nine months, potentially curbing shipments from the largest producer as rival Malaysia maintains a zero-tariff policy for a second month.

The duty will be raised to 9% from 7.5% in January, according to a Trade Ministry decree on its website. The base price to calculate the levy will be increased to US$744 a tonne from US$709, it said. This is the first increase in taxes since May, according to data compiled by Bloomberg.

The increased tariffs by Indonesia may lower shipments and hamper efforts to trim reserves, which have surged to about 90% of storage capacity. Futures in Kuala Lumpur have tumbled 21% after Malaysian inventories reached a record of 2.63 million tonnes in December, prompting the government to cut export taxes. The Malaysian tariffs were cut to zero for this month and will be kept at that level in February.

“Higher taxes will reduce our competitiveness against Malaysia,” Hariyanto Wijaya, a Jakarta-based analyst at PT Mandiri Sekuritas, said by phone. “Our biggest loss will be in our largest market, India, where crude palm oil imports will be taxed 2.5% . But Malaysian shippers won’t have to pay export tax for their shipments, that’s an advantage for them.”

India, the world’s biggest palm oil buyer, raised taxes on imports of crude cooking oils to 2.5% from zero on Jan 17 to shield domestic oilseed growers from cheap overseas sup> plies. – Bloomberg