Indonesia Vows Speedier Process For Palm Oil Exports

Indonesia has issued around 302,000 tons of palm oil export permits since the country restarted exports, senior minister Luhut Pandjaitan said on Sunday, June 5, 2022, while reassuring farmers and exporters that Jakarta would speed up the permit process, Fransiska Nangoy reported for Reuters.

Photo Insert: Indonesia presently levies a maximum $375 per ton fee on top of a maximum $200 per ton export tax on crude palm oil exports.

Indonesia, the world's largest producer of palm oil, suspended exports of the oil, which it uses for cooking, on April 28 in an effort to rein in surging domestic costs.

Exports were allowed to restart on May 23, but restrictions were put in place to protect domestic supply, including the so-called Domestic Market Obligation (DMO), which requires companies to sell a percentage of their products domestically first.

According to industry groups and merchants, the regulatory changes resulted in red tape and slow issuing of export licenses, which helped maintain global palm oil prices high despite lackluster output from rival Malaysia.

According to an official with the Indonesia Palm Oil Association, a number of palm oil mills have ceased buying palm fruits due to a shortage of exports, while farmers say that the price of the fruit has yet to rebound to pre-ban levels after plummeting by roughly 75%.

"Acceleration measures will be taken if we feel that prices of palm oil fruits at the farmer level are still too low," Luhut said, reiterating that the government is setting aside 1 million tons of export quota. Indonesia typically exports around 2.5 million tons of palm oil products per month.

During a transition period following the restart of exports, Luhut said the government would require palm oil producers to sell an equivalent of 300,000 tons of cooking oil each month under the DMO.

At the same conference, Indonesia's economic ministry official Musdhalifah Machmud said the government had made an adjustment to the export fee and that a regulation outlining the modifications would be issued soon. She refused to provide any other information.

Indonesia presently levies a maximum $375 per ton fee on top of a maximum $200 per ton export tax on crude palm oil exports. In March, the levy ceiling was lifted to promote additional onshore sales.

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