Indonesia to Review its Palm Oil Export Quota Ratio

CPO - JAKARTA. Indonesia will review its palm oil export quota ratios amid rising prices of domestic cooking oil, the Coordinating Ministry of Maritime and Investment Affairs.

Indonesia imposes a so-called Domestic Market Obligation (DMO) on palm oil whereby companies are allowed to export only after they have sold a portion of their production at home.

The government regulates the price of palm oil sold under the DMO scheme, which is channeled to a cheap cooking oil programme.

Authorities will also review the price set for the DMO, the statement issued late on Monday said. Under the DMO, crude palm oil price is currently capped at 9,300 rupiah ($0.61) per kilogramme and olein price is capped at 10,300 rupiah.

Indonesia currently allows companies to export six times the volume they have sold to the domestic market.

Indonesia, the world's top palm oil producer, would suspend some existing palm oil export permits until the end of April, officials said on Monday, as exporters had accumulated large quotas for shipments from late last year.

However, authorities said companies could get additional export quotas if they supply the domestic market.

Industry group Indonesia Palm Oil Board reiterated on Tuesday that palm oil companies had little urgency to increase their DMO sales to secure export quota due to weak demand for their exports and high export levies.

"The $52 export tax per tonne should be suspended until after Eid al-Fitr," chairman Sahat Sinaga told reporters, so palm oil companies were encouraged to export and in turn increase their DMO fulfillment to secure more export quota.

Malaysia's benchmark palm oil contract rose more than 2% on Tuesday following Indonesia's move.