Lang
Indonesia's palm oil association called on the government on Friday to delay plans to raise export levies on palm oil, warning that the move could hurt the sector's competitiveness at a time of global economic uncertainty caused by US tariffs and geopolitical tensions.
Indonesia is set to raise palm oil export levies to between 4.75% and 10% from 17 May, aiming to fund a mandatory biodiesel blending programme as well as a palm replanting scheme. The levies currently stand at between 3% and 7.5%.
In a letter addressed to Indonesian Finance Minister Sri Mulyani Indrawati, the association said:
"The current situation is fraught with uncertainty, and it would be a significant risk to introduce a policy that could affect the competitiveness of Indonesian palm oil exports."
Indonesia, the world's largest palm oil producer, faces a proposed 32% US tariff, while Malaysia, the second-largest producer, faces a 24% tariff. Implementation of these tariffs has been suspended until July.
The association added:
"There are concerns that Indonesian palm oil exports could become less competitive compared with Malaysia, particularly in the US market, which Indonesia currently dominates."
Malaysia imposes export levies ranging from 3% to 10% depending on the price of palm oil, with the levy for May set at 10%.
Sri Mulyani had previously said the government would adjust the crude palm oil export tax to ease the burden on exporters in light of the US tariffs, noting that the tax is separate from the levy.
At the same time, she said rising tension between India and Pakistan, both major buyers of palm oil, had raised concerns about a possible drop in demand.
The association added:
"There is no permanent ceasefire between India and Pakistan, which has prompted buyers from both countries to delay purchases of crude palm oil and its derivatives."
There was no immediate comment from Indonesia's Finance Ministry or the Coordinating Ministry for Economic Affairs on the matter.
Source: Reuters