IMPACTS OF CPO-EXPORT TAX ON SEVERAL ASPECTS OF INDONESIAN CPO INDUSTRY
Wayan R. Susila
To control domestic supplyand price of crude palm oil (CPO) and cooking oil, the government of Indonesiahas imposed CPO-export tax since August 1994. As the CPO industry in plays animportant role in Indonesian economy, the imposition of the tax has perceivedto have substantial impacts on various aspects of the industry, such as oninvestment, production, trade, farm income, and welfare distribution. In lineof this issue, the main objective of this study is to assess these impactsusing an econometric model of the industry. The results of the study reveal that this export tax policy hasinhibited the growth rate of investment, production, export, and farmincome. On the other hand, this policyhas been an effective instrument to control domestic CPO and cooking oilprice. Moreover, this policy has causeda substantial welfare transfer from producers to consumers and the government.To compromise these conflicting impacts, an alternative CPO tax formula is alsoproposed within this paper.
Key words : CPO, export tax,policy impacts, Indonesia