Government levies CPO exports to fund biodiesel subsidies

The government will impose a levy on exports of crude palm oil (CPO) to help pay for biodiesel subsidies, replanting, research and development of oil palm farmers to boost their production, reports said on Thursday.

Palm oil exporters would be levied US$50 per metric ton for crude palm oil (CPO) shipments and $30 for processed palm oil products ? when CPO prices stand at below $750 a ton ? said Coordinating Economic Minister Sofyan Djalil. CPO prices hovered around $590 a ton recently, he added.

?The funds will be used to compensate the price differences between the regular diesel and biodiesel [?] I hope the President will sign [a policy] on Monday or Tuesday,? Sofyan told reporters as quoted by The Jakarta Post, adding that the policy would become effective this month. Indonesia is the world?s largest exporter of CPO.

The government is pushing efforts to boost domestic use of biodiesel to reduce dependence on fossil fuels that are largely imported and have added pressure on Indonesia?s current account deficit ? the broadest measure of international trade that has made investors jittery about the country?s assets.

The government will keep imposing other tax charges on CPO shipments when prices exceed $750 a ton with rates ranging between 7.5 percent and 22.5 percent for higher prices. It sets the tax monthly, based on monthly average prices in Jakarta, Rotterdam and Kuala Lumpur. But since October last year, duties were cut to zero as CPO prices dipped below the reference price. (*)