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The Indonesian government is planning to raise export levies on crude palm oil as part of efforts to fund support for the mandatory B40 biodiesel programme — a blend of 60% conventional fossil fuel and 40% biodiesel derived from crude palm oil in the form of fatty acid methyl esters.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the government would raise the crude palm oil export levy to 10% to ensure sufficient funds are collected to implement the B40 programme, which has been planned since January 2025. The levy will continue to be collected by the Palm Oil Plantation Fund Management Agency. Speaking in Jakarta on Friday (20 December 2024), the minister said: "Funding for the B40 programme will continue to come from the Palm Oil Plantation Fund Management Agency. Export levies will remain at 4.5% for derivative products and 10% for crude palm oil."
However, the new export tariffs will not take effect until the finance minister issues a regulation on the change. The Palm Oil Plantation Fund Management Agency had applied a 7.5% export levy since November 2024, down from the previous rate of 11%.
Ahmad Mulizal, head of the corporate division at the Palm Oil Plantation Fund Management Agency, said details of the new levy's implementation are still pending the outcome of a meeting between relevant parties. Meanwhile, Deputy Coordinating Minister for Food and Agribusiness Coordination Dida Gardera confirmed that the Palm Oil Plantation Fund Management Agency still has sufficient funds to financially support the implementation of the B40 programme until the end of 2025.
However, players in the palm oil industry have expressed concern that raising the export levy will affect the export performance of crude palm oil and its derivative products. Eddy Martono, chairman of the Indonesian Palm Oil Association, said raising the crude palm oil export levy to 10% would make crude palm oil exports less competitive in the global market.
According to him, with the current 7.5% export levy, the cost of crude palm oil per tonne is around US$130. If the levy rises to 10%, the cost per tonne would increase to around US$140. Eddy explained that declining exports in 2024 and rising costs of the replanting programme are the two reasons behind the need to raise the export levy. He added that the decline in funds collected by the Palm Oil Plantation Fund Management Agency has limited the financing available to support biodiesel. As a result, the government needs to raise the crude palm oil export levy to cover its needs. The director-general of the Palm Oil Plantation Fund Management Agency, Eddy Abdurrahman, had previously expressed concern about declining funding allocated to support biodiesel in the future.
Source: Al Mal Forum