The Impacts Of Export Tax Policy On The Indonesian Crude Palm Oil Industry

Abstract

The impacts of the crude palm oil (CPO) export tax policy on the Indonesian CPO industry was assessed the 2SLS method which is an econometric model. The export tax was found to be negatively related to mature area of oil palm plantation, production, export, and domestic price of CPO and positively related to CPO consumption and stock. The export tax policy benefitted the domestic consumers of CPO. Clearly, the export tax policy reduces competitiveness of the Indonesian palm oil industry since it hurts producers of CPO. It is recommended that the export tax formulation with well considered and sound justifications is needed and from the study, 11.13 percent export tax on Indonesian CPO was recommended.