JAKARTA — Indonesia, the world's biggest palm oil producer, will impose export levies to fund biodiesel subsidies, replanting, research and development.
Shippers will pay a levy of $50 a tonne for palm oil and $30 for processed products starting this month, according to Sofyan Djalil, coordinating minister for economic affairs, said on Saturday.
The new levy is in addition to a separate export tax that is applied whenever prices of the commodity exceed $750 a tonne, he added.
Indonesia is promoting biofuel use to help absorb rising supplies of the world's most-traded cooking oil and to cut carbon emissions. The country increased the mandated amount of palm oil blended in diesel to 10% from 7.5% in 2013, and last year ordered power plants to use a 20% biodiesel blend.
The biodiesel subsidy was raised in February to 4,000 rupiah (10 baht) a litre from 1,500 rupiah and the mandated blend was increased to 15% this month.
“The funds will be used to compensate the price differences between regular diesel and biodiesel.” Djalil said, referring to proceeds from the levy. “It will also be used to help replanting, research and development and human resources development related to the palm oil industry.”
The levy will be paid even when the export tax is at zero and will be "taken from export tax proceeds when prices are above $750 [a tonne]," Djalil said earlier.
The government sets the tax monthly, based on average prices in Jakarta, Rotterdam and Kuala Lumpur. Crude palm oil shipments attract no tax if the average is $750 or less over four weeks, with rates at 7.5% to 22.5% at higher prices.
The export levy has not been applied for seven months as palm oil prices have slumped.
Palm oil futures in Kuala Lumpur have fallen 18% in the past year and are now below $600 a tonne as a collapse in petroleum costs cut the appeal of cooking oils as biofuel. As well, global supplies of soybeans, used to make an alternative oil, have expanded to an all-time high.