JAKARTA, July 11 — Indonesia plans to use funds from its palm oil export levy to finance development of the country's cocoa and coconut sectors, said its trade minister.
The world's biggest palm oil exporter has collected a levy since 2015 to fund its palm oil biodiesel mandate, smallholder replanting programme, and palm oil research.
"Initially we planned for separate agencies for cocoa and coconut, but it has been decided to merge them with BPDPKS," Zulkifli Hasan told Reuters yesterday.
BPDPKS refers to the country's agency in charge of collecting a palm oil export levy and disbursing the fund.
"It will be a cross-subsidy, for cocoa and coconut development, nursery and seedlings from (the crude palm oil levy)," he said.
Indonesia currently imposed a 0-15 per cent export tax on cocoa beans, which the government will assign to BPDPKS to collect and manage, said Coordinating Minister of Economics Airlangga Hartarto.
Zulkifli said the plans would be implemented soon, and the agency has sufficient money, so there was no need to impose an additional levy on cocoa and coconut producers.
In a statement, the Industry Ministry said the plan was needed to ensure security of supply, as cocoa output shrank by 8.3 per cent annually from 2015 to 2023.
Indonesia was the world's fourth-biggest exporter of cocoa products last year, though it had to import 62 per cent of the cocoa beans needed.
The country's smallholder palm oil group APKASINDO urged the government to reconsider its plan and said there was not yet enough funding for palm oil farmers.
Indonesia plans to double subsidies for palm oil replanting to 60 million rupiahs ($3,695.72) per hectare from May, yet in a recent budget hearing for 2025; the agency was still allocating a 30 million rupiah per hectare budget for the programme.
The replanting programme aimed at improving palm oil yields has been struggling due to administrative hurdles and farmer concerns over income loss while trees mature.
The Indonesian Palm Oil Association (GAPKI) said output in the past five years had stagnated, and accelerating replanting among smallholders is urgent since they account for more than 40 per cent of the country's palm oil plantations.
"We need to accelerate replanting, especially for smallholders. If the fund is used for other commodities, will BPDPKS funds be sufficient?" GAPKI chairman Eddy Martono said.
— Reuters
