Indonesia issues decree on increase in CPO export levy

Indonesia issues decree on increase in CPO export levy

Indonesia Issues Decree on Increase in CPO Export Levy

The Indonesian government has announced an adjustment to the export duties and levies for crude palm oil (CPO), effective for the period of 16–31 January 2023, reflecting broader efforts to manage domestic supply and support biofuel initiatives. According to the Trade Ministry, the CPO export duty was raised to US$74 per tonne, a 42% increase from the previous US$52 per tonne rate for the prior two-week period. Concurrently, the CPO export levy climbed by 7.17%, from US$858.96 to US$920.57 per tonne.

The adjustments align with the government's policy framework, which ties export charges to the CPO reference price. As of January 2023, the reference price had surpassed the US$680 per tonne threshold, triggering higher duties under Minister of Finance Regulation 123/PMK.010/2022 and 154/PMK.05/2022. Trade Ministry Director General of Foreign Trade Budi Santoso emphasized that the changes aim to balance domestic demand amid shifting biodiesel mandates, including the transition from B30 (30% biofuel blend) to B35, which increases domestic consumption of palm oil.

Additional factors influencing the policy include seasonal production declines in Indonesia and Malaysia due to heavy rainfall, as well as the strengthening Malaysian ringgit against the US dollar, which impacts regional price competitiveness. Market data from the Malaysia Derivatives Exchange showed CPO futures contracts for February–July 2023 deliveries rising between 7–17 Malaysian ringgit, reflecting mixed demand dynamics.

The government has not disclosed further adjustments beyond the January 2023 decree, though historical reports suggest ongoing deliberations to recalibrate levies in response to biofuel targets and export competitiveness. Analysts note that such measures could influence global palm oil trade flows and domestic refining capacity, with implications for stakeholders in the sector.

PwC Indonesia, "Production drops, CPO export duty up 42%," January 2023: PwC Indonesia, "Production drops, CPO export duty up 42%," January 2023.
OFI Magazine, "Indonesia increases CPO export tax from 7.5% to 10%": OFI Magazine, "Indonesia increases CPO export tax from 7.5% to 10%."
Reuters, "Indonesia to raise palm oil export levy to 4.5% to 10%": Reuters, "Indonesia to raise palm oil export levy to 4.5% to 10%."

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