JOURNAL MONITOR EDITION 37 : THE IMPACT OF CHANGES IN EXPORT LEVY TARIFF (PMK 191/2020) ON PALM OIL INDUSTRY PLAYERS
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Referring to Law No. 39/2014 concerning Plantations, Article 93 revealed that one of the funding sources for plantation development from levy from the actors. This law has been followed up by the issuance of Government Regulations, Presidential Regulations and Minister of Finance Regulations related to the collection and use of palm oil levy as a source of funding for the development of the national palm oil industry related to the replanting of smallholder plantations, development of plantation infrastructure, human resource (farmers) development, research inovation, promotion (positive campaign) and development palm oil-based biofuels.
The development of the palm oil export levy tariff has change since 2015. In fact, the levy tariffs were abolished due to the decline in CPO prices in 2019. However, in line with the positive trend of CPO prices in 2020, the Indonesian government has re-applied tariffs. export levy through PMK 57/2020 by imposed levy tariff of USD 55 per ton for every levels of CPO price.
In line with trend of increasing CPO prices and the sustainability of programs in development national palm oil industry, such as biodiesel mandatory (B30) and replanting (PSR), these programs require sustainable supporting funding that comes from export levy. Therefore, Indonesian Goverment made an adjustment of the palm oil’s product export levy rates set out in PMK 191/2020. In this regulation, the amount of the CPO’s levy tariff is progressive at a certain price threshold by following the reference price set by the Ministry of Trade. The export levy rates range from USD 55 per ton – UD 995 per ton, or an increase of USD 5 per tonne every increase in the reference price of CPO by 25 per ton.
The impact of the export levy policy (indirect levy) will also be passed through to all industry players, both upstream and downstream along the palm oil supply chain. The results analysis shows that the implementation of CPO’s export levy (PMK 191/2020) is causing losses for FFB and CPO producers. On the other hand, the integrator of oil palm plantation company – CPO/RPO (CPO mill) – the downstream industry and downstream industry players actually enjoy the benefits (gain). However, in total it can be ascertained that the losses suffered by the FFB and CPO producers is greater than the profits enjoyed by the integrator industry and the downstream industry.
The players who lost due to the implementation of the new export levy tariff, namely CPO and FFB producers, especially smallholder farmers must be compensated. The compensation is the optimilization of allocation of palm oil funds came from export levy for development of smallholder farmers through programs such as replanting, human resource development, research innovation, promotion (positive campaigns), provision of plantation infrastructure and development of the institutional oil palm farmers in the area equipped with IVO (Industrial Vegetable Oil) mill.