Indonesia will cut its palm oil export tax for May to 17.5 percent from 22.5 percent and reduce its cocoa bean export tax to 10 percent from 15 percent, Deddy Saleh, director general of foreign trade at the trade ministry, said on Thursday.
The palm oil tax aims to ensure domestic requirements are met in Southeast Asia's biggest economy and to reduce volatility in local cooking oil prices. Indonesia, the world's top producer of palm oil, is expected to produce 21-23 million tonnes of palm oil this year, having outpaced Malaysia as the top palm oil producer in 2007. In May last year, the palm oil export tax was 4.5 percent. Last month, top industry analyst James Fry said the tax was distorting the flow to the market.
The cocoa export tax was introduced a year ago in an effort to encourage the retention of fermented beans for local refining in order to gain a premium in international markets. Indonesia had cut the palm oil tax for April to 22.5 percent from 25 percent in March and raised the cocoa bean export tax to 15 percent from 10 percent. The export tax has caused concern among many producers, who claim it complicates trading and curbs investment.
Indonesian cocoa farmers have been battling the pod borer, worm-like creatures that eat cocoa beans, which became a menace in 1999, as well as the spread of VSD, a fungal disease that attacked leaves, branches and tree trunks across key cocoa-growing areas of Sulawesi in 2008.
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