To boost its exports and ease high inventories, Indonesia has temporarily exempted all palm oil products from the export levy. According to a report, this exemption will be effective till August 31. The move comes after the Southeast Asian nation ban on export lifted of oil.
The country is the world’s largest producer of palm oil, and the latest decision could further push prices down, having fallen nearly 50 percent since late April to their lowest in a year, reports Reuters.
India is the largest importer of palm oil in the world and is dependent on Indonesia and Malaysia for its demand. India It imports more than 13.5 million tonnes of edible oil every year, of which 8-8.5 million tonnes (about 63 per cent) is palm oil. Now, about 45 percent comes from Indonesia and the rest from neighboring Malaysia. India imports around 4 million tonnes of palm oil from Indonesia every year.
In April, Indonesia was ban on export of palm oil In the wake of acute shortage of edible oil and skyrocketing prices in the Southeast Asian nation. The Russo-Ukraine War caused the world’s supply of cooking oil to suffer a huge supply deficit, causing palm and soy oil prices to reach record highs. However, the country lifted the ban within a month. The ban led to a plethora of inventory in the country.
According to the Indonesian Palm Oil Association (GAPKI), the report said that at the end of May, Indonesia had 7.23 million tonnes of crude palm oil in storage tanks. “Our problem now is that the inventory is too high.”
Since the lifting of the ban, Jakarta has implemented a domestic market obligation (DMO), which are rules on mandatory local sales, to allow the product to be placed in cooking oil at home.
On the sidelines of the G20 finance meeting in Bali, Indonesia’s head of fiscal policy agency, Fabrio Kakaribu, said the purpose of removing the levy is to support exports. “In terms of government revenue, (the impact) will not be huge.”
Finance Minister Mulyani Indravati said a progressive levy on palm oil exports would come into effect from September 1, with crude palm oil set at $55 to $240 a tonne, reported Reuters.
The ban on palm oil exports by Indonesia in April was a short-term measure to bring immediate relief from high prices and supply issues in Indonesia, and a complete ban on palm oil exports could be difficult to maintain as the country’s domestic consumption . About 17 million tonnes, which is less than 40 percent of its annual production of about 45 million tonnes.
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