JAKARTA: Indonesia has scrapped its export levy for all palm oil products until Aug 31 in a fresh attempt to boost exports and ease high inventories, finance ministry officials said on Saturday, adding the move would not disrupt government revenues.

The decision by the world’s biggest palm oil exporter could further depress prices, which have fallen by about 50 per cent since late April to their lowest in over a year.

Indonesian palm oil producers have been struggling with high inventories since the country imposed a three-week export ban through to May 23 to reduce domestic cooking oil prices.

Since lifting the ban, Jakarta has implemented rules on mandatory local sales — known as the domestic market obligation (DMO) — to keep produce at home to be made into cooking oil.

At the same time, it has tried to clear up storage tanks by cutting export taxes and launching a shipment acceleration programme, but exports remained slow and companies have blamed the DMO rules, as well as problems with securing cargo vessels.

The levy removal is intended to further support exports, Febrio Kacaribu, the ministry’s head of fiscal policy agency, told reporters on the sideline of a G20 finance meeting in Bali.

“In the context of government revenues, (the impact) won’t be too big,” he said.

Finance Minister Sri Mul­yani Indrawati said a progressive palm oil export levy would be applied starting Sept. 1, with the rate set bet­w­een $55 and $240 per tonne for crude palm oil, depending on prices.

Published in Dawn, July 17th, 2022