Indonesia annuls CPO export tax

Jakarta, INDONESIA | November 09, 2008 by D-8 Secretariat

The Indonesian government’s decision to launch crude palm oil (CPO) export tax exemption from Nov. 1 is aimed at boosting CPO export amid the global financial crisis, an official said here on Thursday.

“We delete the tax export to zero, and hope to achieve the target of 13 million tons for this year’s export,” the deputy of Coordinating Ministry for Economic Affairs Bayu Khrisnamurti told reporters. As the biggest CPO producer in the world, Indonesia’s current CPO is overstocked by more than 2 million tons and exporters suffer big losses.

“We will push both domestic and export market to normalize the condition,” he said. The country’s CPO production rose by 4.1 percent to 16.70 million tons in 2007 from 16.05 million tons a year earlier.

Indonesia’s CPO export is projected at 13.95 million tons in 2008 as production will increase to 18.30 million tons.

The state-owned oil firm Pertamina and state-owned power company PLN have decided to purchase CPO as mandated by the government. In October 2007, the Indonesian government launched anew regulation in which demanding manufacturing companies use at least 2.5 percent biofuel in their fuel consumption. These efforts were expected to reduce their dependency on fossil fuel.

Together with Malaysia, Indonesia records around 89% of all palm oil production of the world. D-8 Director, Amb. Kia Tabatabaee, said that this enormous potency should be very well worked upon for the benefit of more rapid economic growth of the countries and D-8 memberstates, as there is also a strong trend nowadays to use palm oil as biofuel, since palm oil is considered to be a significant step towards greener enviroment protection, due to its ability to reduce aviation industries’ oil consumption and carbon dioxide emissions.

Malaysian Carotino Ups Capacity Utilization Of Biodiesel Units To 95%

Meanwhile, Malaysia’s Carotino Bhd., has raised the capacity utilization of its biodiesel plants to almost 95% this month, a company executive said.

“Capacity utilization has been gradually raised because the current margins in biodiesel production are $40-$50/ton,” U.R. Unnithan, executive director, said. He didn’t give details of the company’s biodiesel exports but said most volumes were being shipped to Europe. He also said the company’s sales will likely not be affected by the upcoming winter months in Europe, when low temperatures can freeze palm oil, as Carotino produces winter-grade biodiesel.

Carotino has two biodiesel production units in Pasir Gudang in peninsular Malaysia’s Johor province with an annual production capacity of 120,000 metric tons and 60,000 tons respectively.

Malaysia’s biodiesel production got a fillip from July onwards after a sharp slump in CPO prices.

CPO prices have fallen around 60% since mid-July this year and are currently hovering around MYR1,500/ton.

Biodiesel prices are also falling on spillover weakness of crude oil and are currently being offered at slightly below $700/ton, free on board Malaysian ports but the lower CPO prices have enabled producers to absorb the lower rates.

A few months ago, Malaysian producers were selling biodiesel in a $1,000-$1,300/ton range.

The downtrend in CPO prices has continued in tandem with the slump in crude oil and this has ensured palm-based biodiesel production continues to be economically viable, said Unnithan.

Analysts said the companies that sold forward biodiesel earlier this year are getting higher returns, but they had simultaneously also locked in purchases of CPO, which was costlier then.

Read Also

• Malaysia doubles 2008 biodiesel export forecast
• Malaysia, Indonesia to Mandate Use of Biodiesel Early in 2009
• Malaysian Palm Oil and Jatropha Receive Investment
• Malaysia, Indonesia To Use Palm Oil Surplus To Produce Biodiesel
• Malaysian IJM Plantations plans RM600mil capex for Indonesian ops
• Indonesian Private and State Sectors to Gear Up on Biodiesel and Palm Oil
• Southeast Asia’s Largest Biodiesel Plant
• Malaysian Govt Approves 91 Licences for Biodiesel Production
• Indonesia to Export Rice Next Year
• Indonesia and Malaysia explain to EU on palm-oil for biodiesel