PALMOILMAGAZINE, JAKARTA – The Indonesian government plans to increase the crude palm oil (CPO) export levy to 10% from the previous 7.5% based on the Ministry of Trade’s reference price. This step is taken to support the implementation of the B40 biodiesel program which will come into effect on January 1, 2025.
Coordinating Minister for Economic Affairs Airlangga Hartarto explained that the increased levy will be the main funding source for the biodiesel incentive, which is managed by the Palm Oil Plantation Fund Management Agency (BPDPKS).
“The funding will come from the BPDPKS fund. We will raise the levy to 10% and prioritize its use for public service obligations (PSO),” Airlangga was quoted by Palmoilmagazine.com, from bloombergtechnoz, Saturday (21/12/2024).
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The increase in the export levy rate will take effect after the Minister of Finance Regulation (PMK) regulating this change is issued. However, Airlangga has not yet provided details on the new tariffs for other processed palm oil products.
Currently, the CPO export levy rate is regulated in PMK Number 62 of 2024, with a rate of 7.5% of the Ministry of Trade’s reference price. For other processed palm oil products, the levy rates range from 3% to 6%.
The government’s move also responds to the findings of the Supreme Audit Agency (BPK) regarding the risk of sustainability of biodiesel incentive financing. In the report Overview of Semester Audit Results (IHPS) I-2024, the BPK said that the management of BPDPKS funds had not fully considered sustainability aspects.
BPK noted that biodiesel incentive spending reached 90% of the total use of BPDPKS funds, exceeding the established budget policy. This poses a risk to the sustainability of the biodiesel program, especially if funding sources are inadequate.
“The biodiesel supply and utilization program is at risk of funding difficulties, which could interfere with BPDPKS’ objectives,” the BPK report states.
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The implementation of B40 biodiesel is considered one of the government’s strategic steps to reduce dependence on fossil fuels while increasing domestic CPO absorption. The program is expected to have a positive impact on the palm oil industry and strengthen economic sustainability in the renewable energy sector.
However, the challenge of funding sustainability and incentive management is a big homework for the government and BPDPKS to ensure that this program not only runs, but also provides long-term benefits for all stakeholders. (P2)
