A government hike in the export tax rate on crude palm oil (CPO) may not result in a drop in cooking oil prices, the objective of the move, a senior industry official said.

CPO is typically used as a raw material for cooking oil in Indonesia, and tight supplies caused by high levels of exports, thanks to booming demand from China, India, the United States and Europe, have upped domestic prices.

Last week the government boosted the CPO export tax to a maximum 10 percent under a progressive tax regime, up from a fixed rate of 6.5 percent. The highest tax rate is applied if the CPO price rises to US$850 per ton or above.