EXPORT TAX TO DRAG DOWN PRICES OF FRESH OIL PALM FRUIT BUNCHES: APINDO

Medan, N Sumatra, May 28 (ANTARA) - The government's plan to impose a three-percent tax on CPO exports in June will not only reduce the competitive edge of the Indonesian commodity in the world market but also lower the price of farmers' oil palm fresh fruit bunches (TBS), a a business association said.

"We are still facing an economic crisis. The government should provide protection for traders and farmers so that they will be able to help stimulate the real sector," secretary of the Indonesian Entrepreneurs Association (Apindo) for North Sumatra, Laksamana Adiyaksa said on Tuesday.

Laksamana Adiyaksa who is also treasurer of the Indonesian Palm Oil Businessmen Association (Gapki), said the government was planning to impose a tax on CPO exports after seeing the increase in the price of CPO while actually the increase was not caused by a fundamental factor such as rising demand.
After all, the imposition of the tax could also reduced the price of TBS at the farmers level. According to Adyaksa, the policy could cause price to fluctuate. The price per metric ton of CPO in Rotterdam had slightly dropped this week from US$800 to US$780.

Demand for CPO from Europe also tended to weaken due to global economic crisis. The reduced export price has also affected the CPO price in the local market. On May 4, 2009, the price per kg of CPO happened to reached Rp8,978 but on May 15, 2009 it has dropped to Rp8,670 per kg, according to Laksamana Adyaksa.

TBS bunches trader J. Nasution said that farmers in Medan had expressed worries about price surcharges by traders as a result of the export tax imposition.

"In the past, traders imposed a price surcharge when there was CPO export tax. The re-imposition of the tax would cause farmers a price deduction," he said.