Palm oil export levy realisation this year dropped 52%

This article has been translated by PwC Indonesia as part of our Plantation News Highlights service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - Realisasi PE Sawit Tahun Ini Turun 52%

23 December 2022

By: Ridho Syukra

Jakarta - Palm oil export levy realisation collected by the Oil Palm Plantation Support Fund Management Agency (BPDPKS) throughout 2022 reached Rp34.59 trillion, which decreased by around 52% from Rp71.64 trillion in 2021. Export levy decreased due to the low export volume of palm oil products this year, which only reached 34.67 million tonnes, whereas last year it reached 37.78 million tonnes.

BPDPKS President Director Eddy Abdurrachman said that the decrease in the export levy value was affected by the low export volume of palm oil products this year. Palm oil export volume in 2022 is lower than last year, which affects palm oil export revenue. “Exports decreased due to the government’s policy that delayed exports of palm oil products, such as crude palm oil (CPO) and refined, bleached, and deodorised (RBD) palm oil, from April until May 2022. In that span of one month, there was no export. So, compared to 2021, palm oil export volume decreased,” Eddy said during the press conference titled “Palm Oil Sector Performance in Accelerating Economic Growth in Indonesia” in Jakarta on Thursday (22/12/2022).

Another factor that decreased palm oil export levy was the government delaying the export levy tariff as part of the implementation of the domestic market obligation (DMO) policy on palm oil. The policy was continuously implemented until 15 November or for around four months, so BPDPKS did not receive export revenue due to the 0% export levy tariff. However, since 16 November, export levy has been reapplied as CPO price surpassed US$800 per tonne. According to Eddy, export levy policy has successfully boosted downstreaming with CPO export composition continuously decreasing. Based on the export volume, palm oil derivative products have surpassed 90% and CPO only reached 6%. In 2022, palm oil export volume reached 34.67 million tonnes worth US$30.8 billion.

During the occasion, Eddy Abdurrachman forecasted that palm oil product export levy revenue in 2023 could reach Rp30 trillion by considering the global economic development. “Regarding 2023, we forecast that export levy revenue will be around Rp30 trillion,” Eddy said. With spending potentially increasing, BPDPKS can experience a deficit in 2023. However, there is still a balance of Rp20 trillion from 2022 to prevent deficit. If Indonesia carries out the 35% biodiesel (B35) program in 2023, CPO price will be around US$970 per tonne. This means that the biodiesel program is crucial to maintain palm oil price due to the high absorption. The absorption will reach around 13.15 million kilolitres (kl), which will be significant in maintaining palm oil.

BPDPKS forecasts that palm oil export in 2023 will grow to 36-38 million tonnes. The forecast considers palm oil export that has been recovering since the CPO export ban was lifted. “Export activities are going back to normal, so palm oil export in 2023 is forecasted to reach around 36-38 million tonnes,” he revealed. Besides that, domestic palm oil production is also predicted to increase. Moreover, Indonesian palm oil in 2023 is predicted to contribute to global palm oil and fats. Production growth in 2023 is forecasted to increase and will contribute 32% to global palm oil and fats.

The palm oil sector in Indonesia involves 2.4 million independent palm oil farmers and 16 million workforce, and it is continuously boosting the gross domestic product (GDP) of the plantation sector so that Indonesia’s GDP in the third quarter of 2022 grew 5.72%. The palm oil industry has contributed to the government’s revenue, company profit, job creation, increased revenue of small farmers.

Biodiesel program

Meanwhile, BPDPKS recorded that the biodiesel fund distribution performance reached Rp144.59 trillion from 2015-2022 for 42.98 million kl of biodiesel. During that period, BPDPKS also successfully saved Rp299.65 trillion of foreign exchange, while tax successfully provided Rp13.14 trillion of added value. BPDPKS also successfully reduced greenhouse gas emission by 64.16 million tonnes of carbon dioxide (CO2).

Eddy said that the biodiesel program was crucial in determining palm oil price stability. Before the program was initiated in 2015, palm oil price continued to decrease while production exceeded demand. The mandatory biodiesel program was implemented in 2008 with a biodiesel content of 2.5%. Gradually, the biodiesel content was increased to 7.5% in 2010. From 2011-2015, the biodiesel percentage was increased from 10% to 15%. Next, on 1 January 2016, the biodiesel content was increased to 20% (B20). The mandatory B20 program ran well with incentives from BPDPKS for the public service obligation (PSO) sector. Starting from 1 September 2018, the incentive provision was expanded to non-PSO sectors.

BPDPKS has also distributed Rp501.2 billion for research and development. The budget has funded 279 research involving 950 researchers at 78 institutions from 2015-2022. Eddy explained, this year, BPDPKS was more selective in funding. The main priorities are research that can achieve commercialisation and be directly utilised by industries. Meanwhile, the human resources development program provided training for 11,688 participants and scholarships for 4,265 students. The funds distributed reached Rp305.2 billion from 2015-2022. BPDPKS is committed to continuously increasing the number of benefit recipients of this program in the upcoming years.