Indonesia intends to sharply lower palm oil export tax this month, the market trend is unpredictable

The Ministry of Finance of Indonesia stated that when the price of crude palm oil exceeds USD 1,000/ton, the highest export levy for palm oil will be lowered to USD 175/ton from USD 255/ton previously. When the price of crude palm oil reaches at least US$750/ton, a special export tax of US$50/ton will be charged; for every US$50/ton increase in crude palm oil, the special export tax will increase by US$20/ton.

According to media reports, the Indonesian Palm Oil Association (Gapki) stated that Indonesia's decision to change the palm oil export tax structure is expected to increase exporters' profit margins, although other groups believe that frequent changes to the rules are hurting demand. Gapki Chairman Joko Supriyono said that lowering taxes is expected to provide companies with room to invest or increase production capacity to absorb additional workers. This is important when the government wants the economy to recover more quickly.

However, other groups said that frequent changes in the tax structure have brought uncertainty to the industry. Gulat Manurung, chairman of the smallholder organization APKASINDO, said that these changes may cause buyers to adopt a wait-and-see attitude, and demand for Indonesian palm oil declines, adding that palm fruit prices are affected. At the same time, Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association (GIMNI), said that frequent changes in taxation rules make it difficult for traders to calculate the price and risk of palm oil contracts. The global market does not like changing policies, and the rules should be maintained for at least one year.