Indonesia mulls more frequent setting of crude palm oil reference price

INDONESIA is considering setting its crude palm oil (CPO) export reference price every 2 weeks instead of monthly, a senior trade ministry official said on Wednesday (Jul 6), aiming to adjust quicker to fast-changing international market prices.

The government currently sets a monthly reference price based on Indonesian, Malaysian and European crude palm oil prices. That price is used to determine the palm oil export tax and levy each month.

“Within a month the (global) price can be volatile, we are considering to set the export reference price by every 2 weeks,” senior official Veri Anggrijono told media on Wednesday.

The Malaysian benchmark palm oil futures fell 22 per cent in June and have slumped more than 20 per cent so far in July, a result of Indonesia boosting exports and expectation of Malaysian production increasing, while global demand is sluggish amid recession concerns.

Veri did not give a time frame for when a decision would be made, but said authorities were hearing views from stakeholders, government bodies and industry participants about the proposal.

He said some businesses might find the 2-week period burdensome as they may need to adjust their contracts at the same frequency.

SEE ALSO

Asean CPO stocks battered as palm oil price tanks; further decline expected in H2

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Indonesia currently charge a maximum US$288 per tonne for export tax and until Jul 31 will charge a maximum US$200 per tonne export levy for when the reference price exceeds US$1,500 per tonne. REUTERS