[JAKARTA] Indonesia, the world's largest palm oil producer, is considering reducing export taxes to boost competition with Malaysia, which set its tariff for the crude variety at zero this month to help clear record stockpiles.
"Ideally it should be at zero too," Trade Minister Gita Wirjawan told reporters on Friday. The possible reduction "can be at any level, as long as it can help in maintaining the downstream-industry development and our competitiveness", he said, referring to processors and refiners.
Enhanced competition from Indonesia for overseas sales of the most-used cooking oil may erode Malaysian exports, deepening a bear market in crude palm oil in Kuala Lumpur. Malaysia's reserves gained to the highest ever last month, data showed on Thursday, and surveyors said exports fell in the first 10 days of January. The two countries account for 87 per cent of global shipments, according to the US Department of Agriculture.
The ministry has held talks with the industry minister on the tax issue, Mr Wirjawan said. The Indonesian Palm Oil Association, known as Gapki, has asked the government to cut the tax to avoid losing market share in countries such as India that typically buy more crude oil, secretary-general Joko Supriyono said on Jan 8.
Source: http://www.businesstimes.com.sg/premium/asia-pacific/indonesia-may-slash-palm-oil-tax-zero-20130114
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