Indonesia Raises Palm Oil Export Levy to US$255 per Tonne

Jakarta — Indonesia is raising its palm oil export levy to a progressive scale of US$55 to US$255 per tonne through Finance Ministry Regulation (PMK) No. 191/PMK.05/2020. Promulgated on 3 December 2020, the rule takes effect on 10 December 2020 and replaces the previous palm oil export levy scheme.

Under the new rule, crude palm oil (CPO) exports are levied at US$55 per tonne when the reference price is at or below US$670 per tonne. The tariff rises in stages as the CPO price climbs, up to a maximum of US$255 per tonne when the reference price exceeds US$995 per tonne.

A progressive scale based on the reference price

The Coordinating Ministry for Economic Affairs explained that the export levy for palm products including CPO and derivatives is set based on the Trade Ministry's reference price, with the calculation cut-off at the export declaration (PEB) issuance date. The increase applies not only to CPO but also to derivatives such as crude palm olein, crude palm stearin, PFAD and RBDPO.

Deputy for Food and Agribusiness Coordination Musdhalifah Machmud said the adjustment responds to the positive trend in CPO prices, which reached US$870.77 per tonne in December 2020. Palm product export value in January–September 2020 was also recorded at US$15.486 billion, up from US$14.458 billion in the same period of 2019.

Funding biodiesel incentives and replanting

The levy is managed by the Oil Palm Plantation Fund Management Agency (BPDPKS) to finance programmes including human resource development, research and development, smallholder replanting, infrastructure, promotion and biodiesel incentives. BPDPKS president director Eddy Abdurachman said the additional funds from the new tariff are a momentum to improve the agency's services.

The government also raised smallholder replanting funding to IDR 30 million per hectare, up from IDR 25 million per hectare, with a target of 180,000 hectares per year. It remains committed to continuing the B30 programme in 2021 with a biodiesel distribution target of 9.2 million kilolitres, in line with the direction of Coordinating Economic Minister Airlangga Hartarto.

A note from industry

The Indonesian Palm Oil Association (GAPKI) asked the government to review the increase. GAPKI secretary general Agam Faturrochman said businesses had hoped the current CPO price rally could compensate for the slump in April 2020, when prices fell to MYR 2,064 per tonne.

Policy background and related data are available on the biodiesel regulations and HIP biodiesel pages.