Indonesian exporters of renewable feedstocks are looking at various alternatives, from ignoring tax notices to considering legal options and creative labeling, to continue trade as Jakarta clamps down on the export of palm oil mill effluent oil and used cooking oil, market participants said this week.
On Jan. 8, Indonesia, the largest supplier of palm oil in the world, said it would restrict exports of POME and UCO as the government tries to retain sufficient feedstock in the country to achieve its new 40% biodiesel blending mandate.
Soon after, Indonesia's finance ministry sent notices imposing a retroactive duty of $20/mt on POME oil exports made between July 2023 and September 2024.
The retroactive tax could push a lot of small collectors of POME to stop their business, a trader said, adding that the retroactive tax claim was "controversial."
Indonesia's additional tax demand identifies POME oil exported under HS code 2306.90.90 between July 2023 and September 2024 under a new classification called "oil cake and residue," which had an export levy of $25/mt. However, under current regulations, the tax for POME is stated at $5/mt, a Jakarta-based exporter said.
The exporter, who has received retroactive tax notices for two shipments from the customs department, said customs was asking for the difference in duties retroactively, but the law levying $25/mt on POME was repealed in 2019.
"Some exporters [are] not paying attention to this ... so they just ignore it, and surprisingly their accounts got blocked. I knew already 10-15 exporters got blocked," another POME trader said.
Meanwhile, some exporters are now turning to domestic markets where POME oil is fetching healthy prices, a source said.
The source, who closed his export company due to the export issue, is now selling to a Musim Mas refinery at Rupiah 12,800/kg (79 cents/kg), whereas a local tender for crude palm oil was at Rupiah 14,850/kg.
Scrutiny on exports
In January, Indonesia's Ministry of Trade said the country's exports of palm waste products had surpassed what it termed "reasonable capacity," which it said was around 300,000 mt.
The trade ministry said POME exports exceeding the 300,000 mt mark was the result of a "mixture practice" of blending crude palm oil with POME in order to increase exports while circumventing CPO's formerly higher levy.
The US Department of Agriculture expects Indonesia's exports of POME to reach a record high of around 2 million mt in 2024 due to continued demand from the EU, China and South Korea. Indonesia's POME exports were around 1.84 million mt in 2023, according to Commodity Insights trade data.
A palm oil analyst based in Medan, Indonesia, said some suppliers were still exporting POME but in tiny quantities.
It is also possible for exporters to relabel UCO as "refined POME" and export it, as then it would have the same HS code as refined, bleached & deodorized palm oil, the analyst said.
Platts, part of S&P Global Commodity Insights, assessed POME FOB Malaysia unchanged at $1,040/mt Feb. 17 for April-May loading cargoes.
Platts has paused assessing the price of POME FOB Indonesia since Feb. 5, considering a rollover amid the export restriction.
