Indonesia has announced that a full tax exemption on palm oil exports will go into effect from November 1, 2008.
As the world’s largest producer it is hoped the move will boost dwindling trade potential as the global financial crisis rumbles on.
It is hoped that by exempting the product from export tax, it will increase the country's ability to compete in the international markets. The move is also part of a wider policy aimed at supporting the country's flagging agricultural sector, which has been hit the hardest by the current economic downturn.
Indonesia's trade ministry has already announced two cuts in export tax in recent weeks, from 10% to 7.5% on September 22 and then to 2.5% on October 24. The ministry also lowered its base export prices for palm oil to USD736 a tonne for October, from USD902 a tonne a month earlier.
Palm oil prices have slumped this year and are about 65% below where they were in March.
In early October, the government announced that it was preparing special incentives to maintain growth of exports amid weakening global demand caused by the liquidity crisis in the US.
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