Indonesia Set to Re-Impose Tax on Palm Oil Exports

By Yoga Rusmana

May 25 (Bloomberg) -- Indonesia, the world’s largest palm oil producer, will resume taxing shipments of the commodity from next month after prices rebounded, according to Diah Maulida, director general of foreign trade at the Ministry of Trade.

The country will impose a 3 percent duty on crude palm oil exports and also raise the so-called base price for calculating the tax to $700 a metric ton from $560, Maulida wrote today in a text message. Indonesia had scrapped a 7.5 percent tax last November after prices tumbled amid the global recession.

The reintroduction was expected by the Indonesian Palm Oil Producers’ Association, which held talks with government officials last week on the move. The government said in October the charge may be re-imposed, fixed at 1.5 percent if palm oil in Rotterdam was more than $700 a ton, or 3 percent if it averaged $751 to $800 a ton.

Palm oil in Rotterdam, which tumbled 46 percent in 2008, has surged 43 percent this year on expectations demand may rise on signs the global economy is recovering. The new levy was based on an average price in Rotterdam of $774.93 a ton between April 20 and May 19, Maulida wrote.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net