Indonesia may raise palm oil export tax to 10%

Indonesia, the world's largest palm oil producer, plans to raise the tax on exports of the commodity to as much as 10 per cent in September to reduce overseas shipments and ensure local supplies are adequate.

"The higher the price, the higher the export tax," Achmad Manggabarani, director-general of plantations at the agriculture ministry, said today. The decision will take effect on September 1.

Crude palm oil exports have been taxed at 6.5 per cent of the base price since June 15, up from 1.5 per cent previously, while refined palm oil products are also taxed at 6.5 per cent, up from 0.3 per cent. The trade ministry sets the base price each month, using international rates as a benchmark, and uses it to calculate exporter tax payments.

The Indonesian government wants plantation companies to sell the tropical oil for domestic consumption rather than for export to curb rising prices of cooking oil.