Indonesia eyes palm oil flat tax -

Indonesia eyes palm oil flat tax

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Indonesia eyes palm oil flat tax

The Indonesian government is investigating a flat export tax for crude palm oil (CPO), while global prices have fallen 14.4% from three-year highs in February.

Indonesian Trade Minister Elka Pangestu told the government was studying the flat tax proposal, with a policy aim to ensure adequate supply of raw materials for domestic industry and value-adding palm oil processing.

"We have looked again at the proposal for a would (be) flat export tax on CPO. We have come to a number of options but have not yet endorsed any of them," she was quoted as saying.

Deputy Trade Minister Mahendra Siregar told the website the CPO export tax had not yet had a significant impact on downstream processing production, while taxes have increased in line with prices since October 2010.

In December the CPO export tax rose to 15% from 10% in November, while in October it was 7.5%, the story reported.

Data compiled by Bloomberg has shown May-delivery palm oil contracts have fallen 2.8% to US$1,121 per metric ton (MT), while on Feb. 10 prices reached a 35-month high of around US$1,307, due to production falls in Indonesia and Malaysia.

OSK Investment Bank Bhd. senior vice president for futures & options Donny Khor, told Bloomberg prices would come under pressure, amid higher output forecasts and expected soybean crop improvement in South America.

Malaysia and Indonesia are by far the world's largest palm oil producers, with Food and Agriculture Organization for the United Nations (FAO) figures showing in 2008 they produced 17.7 million MT and 16.9 million MT respectively.



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