Indonesia to impose palm oil export levy on Thursday

[JAKARTA] Indonesia will impose a levy on palm oil exports starting on Thursday after weeks of delay, providing as much as 4.5 trillion rupiah this year to state coffers, government officials said.

The new levy will require exporters to pay US$50 per tonne for crude palm oil and US$30 for processed palm oil products shipments when the export tax is cut to zero - which happens when a reference price drops below US$750 a tonne.

The proceeds from the levies are to be partly used to help fund Indonesia's biodiesel subsidies that were introduced to help cut the country's oil import bill and to soak up excess palm oil at the world's top producer of the tropical oil.

The levy, announced in March, has faced repeated delays due to administrative issues, making it difficult for traders to set prices and raising doubts over whether the levy will be successful in generating planned biodiesel subsidies.

However, with the levy coming into effect, Indonesia expects to get up to 10 trillion rupiah of revenue on an annual basis.

"We have calculated results from the subsidy. We will give 600-700 rupiah subsidy per litre for biodiesel," Bayu Krisnamurthi, chief executive of the finance ministry's Indonesia Estate Crop Fund, told reporters on Tuesday.

REUTERS