Government Studies Incentives of Oil Palm Industry
Friday, 02 March, 2007 | 15:16 WIB

Tempo Interactive, Jakarta: The Department of Industry is preparing some incentive packages to boost the development of the downstream oil palm industry. Tax assessments on exported oil palm that has been widely discussed is still being considered.

“The government is prioritizing its long-term strategy to improve the oil palm industry. In the future, incentives will be granted, instead of issuing policies,”said Director General of Agro- and Chemical Industries Benny Wahyudi yesterday (03/01) in Jakarta.

A strategy to develop the oil palm industry is required taking into account the significance of oil palm to build up biodiesel in the country, in addition to boosting the downstream oil palm industry. Up until 2010, the government will need the additional 5 to 6 million tons of oil palm for biodiesel raw materials.

Indonesia is the largest country producing oil palm with 16 million tons in 2006. 12 million tons of oil palm have been exported whereas the remainder of 4 million tons have been aimed at meeting domestic needs.

According to Benny, the incentives that can be granted include a tax allowance or reduction of taxable income of 30 percent of investment value for a six year period.

Agricultural observer M. Fadhil Hasan said that in order to grow oil palm, incentive granting would be the most possible measure. Adding export tax of 1.5 percent of the current position will only lessen competitiveness and damage farmers as the producers.

According to Fadhil, the incentives that can be given include tax allowance, levy exemption, infrastructure improvement and removal of levies which cause a high economy.

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