Indonesia kept its export tax for crude palm oil (CPO) shipments at USD $18 per metric ton for March 2017 as the government's March reference CPO price was determined at USD $825.8 per ton, up 1.27 percent (m/m) from the reference price in the preceding month. When this reference CPO price of Indonesia is set below USD $750 per ton, the export tax is scrapped. When the price reaches the range of USD $750 - $800, then Indonesian authorities introduce a USD $3 per ton export tax, followed by a USD $18 per metric ton export tax if the reference price rises to the range of USD $800 - $850 per ton.
Visible in the table below Indonesia's reference CPO price made a solid recovery in 2016, rising 41.5 percent between the first month of 2017 compared to the first month of 2016. This price rise is a boon for Indonesia's palm oil producers and exporters. For example, net profit of Astra Agro Lestari, Indonesia's biggest agribusiness company by value, surged a whopping 224 percent (y/y) to IDR 2 trillion (approx. USD $150 million) in full-year 2016.
Indonesia is the world's largest producer and exporter of palm oil (followed by Malaysia), thus this sector is a key foreign exchange earner and provider of employment opportunities.
Indonesia's Reference Crude Palm Oil Price:
Source: Trade Ministry of Indonesia
Indonesian Palm Oil Production and Export Statistics:
(in USD billion)
Sources: Indonesian Palm Oil Producers Association (Gapki) & Indonesian Ministry of Agriculture