Indonesian Palm Oil Export Levy Faces Potential Increase

Background on Current Export Levy

The Indonesian government recently raised the palm oil export levy from 7.5% to 10% effective May 17, 2025, through Minister of Finance Regulation No. 30/2025. This change was implemented to support the Palm Oil Plantation Fund Management Agency's operations.

Upcoming B50 Biodiesel Mandate

The government is planning to implement the B50 biodiesel program in mid-2026, which involves blending 50% crude palm oil (CPO) with diesel fuel. According to POPSI, this mandate is expected to significantly increase the funding requirements for biodiesel subsidies.

Potential Impact on Export Levy

With the increased financial burden of the B50 program, POPSI warns that the export levy may need to be raised above the current 10% level. This potential increase is necessary to cover the rising costs of subsidizing the biodiesel program, which will have a higher CPO requirement.

Market Implications

The potential hike in export levy could have significant implications for Indonesia's palm oil industry. Higher export levies may reduce the competitiveness of Indonesian palm oil in the global market, potentially affecting export volumes and prices.

Conclusion

The planned implementation of the B50 biodiesel mandate in mid-2026 is likely to have far-reaching consequences for Indonesia's palm oil sector. Stakeholders should closely monitor developments regarding the export levy and the government's plans to manage the financial implications of the B50 program.