Indonesia is considering a review of its export levy on palm oil, aiming to maintain its competitiveness in the global market, particularly in comparison to its primary rival, Malaysia.

The review is a routine part of Indonesia's trade policy evaluation, with the most recent change occurring in September 2024.

The decision comes amid fluctuating palm oil prices and the ongoing competition between Indonesia, the largest producer and exporter of palm oil, and Malaysia, which ranks second.

The review follows market responses, such as the recent rise in Malaysian palm oil futures, which were driven by speculation that Indonesia might adjust its export levy or duty structure.

However, palm oil futures softened at the start of the current week, alongside a stronger Malaysian ringgit. The price of soybean and palm oil also declined in early trade on China’s Dalian Commodity Exchange.

In Indonesia, the government sets a monthly benchmark price for palm oil, which influences both export duties and pricing.

The export levy is aimed at ensuring the welfare of palm oil producers and maintaining the global competitiveness of Indonesian palm oil. Senior officials from Indonesia’s Ministry of Economic Affairs have stated that the export levy will be reviewed regularly, typically every three to six months.

Indonesia’s decision to evaluate its export levy policy is important for both domestic producers and international markets, as it could impact the pricing dynamics in the palm oil sector, which is crucial for global food and biofuel markets.