Indonesia to remove DMO, raise CPO levy

Indonesia will remove its domestic marketing obligation (DMO) for exporters, but raise export levies on crude palm oil (CPO) to subsidise domestic vegetable oil prices, trade minister Muhammad Lutfi said today.

A timeline for the changes was not given, but market participants expect clearer details to emerge in the next 1-2 weeks as Lutfi indicated in earlier this week.

Under the new levy mechanism, the maximum tax bill on CPO exports will be raised to $675/t from its current $375/t, he said, with a CPO sales price of $1,500/t triggering the highest rate.

The ministry announced on 15 March it would revise the types of cooking oils it will subsidise through the palm levy fund to include only bulk palm olein and exclude packaged vegetable oils.

Indonesia has implemented several rounds of measures in an effort to tame consumer edible oil prices, which have hit fresh record highs several times this year. The announcement comes just a week after Jakarta hiked its so-called DMO, or volume of palm oil sellers must market locally before exporting, to 30pc, from a previous 20pc.

The move comes as a relief to used cooking oil (UCO) suppliers, who have lobbied extensively to get their product removed from the DMO requirements.

By Lauren Moffitt