Indonesia may increase export levy on palm oil
19-Mar-2025 01:53 PM
Indonesia Considering Higher Export Levy on Palm Oil to Boost Biodiesel Production
Key Takeaways:
Planned Increase in Export Levy:
- Current Levy on CPO: 3% – 7.5% of reference price.
- Proposed Levy on CPO: 4.5% – 10% of reference price.
- Example: If CPO reference price is $1,000 per tonne, the levy may rise from $30-$75 to $45-$100 per tonne.
Government's Two-Pronged Strategy:
- Encouraging Refining Industry:
- Higher levy on crude palm oil (CPO) discourages raw exports.
- Lower duty on refined palm oil to boost processed exports.
- Biodiesel & Renewable Energy Push:
- Palm oil blending in biodiesel increased from 35% to 40% in 2024.
- Plan to reach 50% by 2026 to cut dependence on petroleum imports.
- Upcoming 3% palm oil blending in jet fuel (2025).
- Encouraging Refining Industry:
Potential Market Impact:
- Reduced global supply of CPO could raise international palm oil prices.
- Malaysia may benefit as buyers seek alternative CPO sources.
- Food & cosmetics industries may face higher costs due to supply restrictions.