Indonesia to limit crude palm oil exports

 

JAKARTA: Indonesia plans to limit exports of crude palm oil (CPO) to encourage downstream work, its Industry Minister M.S. Hidayat said yesterday, a trade group doubts would easily lead to the hoped for surge in value-added products.

However, the plan is unlikely to have any near-term impact on CPO supplies onto the world market.

The domestic market's capacity to absorb output of refined products and the government's definition of such products is key, Joko Supriyono, secretary general of the Indonesian Palm Oil Association said.

Joko said if the government definition of downstream industry excluded refined products the industry has been producing, "it is going to be difficult to achieve the target".

Biodiesel firms, with combined capacity of 3.1 million tonnes, only produced 344,000 tonnes in 2009. They have also stopped supplying state fuel distributor Pertamina from last month.

Joko said there was a misperception that Indonesia's palm oil industry only exported CPO, while in fact exports of refined products such as RBD palm olein and RBD stearin accounted for about 40 per cent of total exports.

The government plans to limit exports of CPO to not more than 50 per cent of output in 2015, and to 30 per cent of output in 2020, Hidayat said.

"Such a target can be achieved by developing the downstream industry, which can create added-value locally," said he added. - Reuters