* ICDX targets 5,000 lots per day for palm oil futures
* Government still expected to use ICDX palm as benchmark
* Tax waiver needed for ICDX bullion contract
By Michael Taylor
JAKARTA, Jan 24 (Reuters) - The Indonesia Commodity & Derivative Exchange (ICDX) wants to more than double daily trade for palm oil futures, to firmly establish screen dealings in the top producer of the oil used in food, cosmetics and biofuel.
The exchange has a fledgling gold contract and also plans to venture into coal. The world's palm oil trade at present uses Malaysian or Rotterdam futures prices as a benchmark
"I'm very pleased with the outcome of the contracts," Megain Widjaja, chief executive officer at the ICDX told Reuters on palm oil. "Given the age of our exchange and the contract, we did very well. However, we are not satisfied."
"There are still more players that can participate, and many players adopting a wait-and-see attitude," he added.
The exchange launched Indonesia's second palm oil futures contract in May 2010, in the hope of creating a local price benchmark and rival to the well-established Malaysian palm oil futures contract.
"Our target is 5,000 lots on a per-day basis, because we feel it is a tipping point to get more attention from industry players."
As of Dec. 31, 2010, there had been 193,563 lots of 10 tonnes each, transacted on the ICDX's rupiah-based palm oil futures contract, or around 2,000 lots per day. Currently, the ICDX palm oil contract has 22 companies participating, at varying degrees of activity.
Widjaja said companies trading on the new exchange included Wilmar International, Sinar Mas Agro Resources Tbk, and Duta Palm.
"We want to encourage the less active ones to be more active, and we're working together with brokers to approach new participants," he said.
"Quite a few big names are supporting the contracts, and we hope to see more participation -- not only from industry players -- but retailers as well."
GOVERNMENT EYES INDONESIAN BENCHMARK
The industry currently uses Malaysian palm oil futures and the Europe spot price in Rotterdam as benchmarks.
Unlike Malaysia, Indonesia does not have a strong industry regulator that releases reliable data on monthly production, exports and stocks.
This absence of data makes it hard to build up liquidity -- one of the main reasons why a previous Indonesian palm oil futures contract attempt failed.
But in August, a regulatory official said Indonesia's trade ministry may use a new palm oil futures contract as one of the benchmarks to calculate the monthly export tax applied on the commodity.
"They are discussing it, and drafting the decrees on how they are going to use our prices to become the benchmark for export duties," Widjaja said, adding that he expected the process to be completed in 2011.
Indonesia is the world's top palm oil producer with output expected to reach nearly 23 million tonnes this year.
"The government is very upbeat about it -- naturally, if they want the contract to be successful, then they will have to support it," he added.
In March last year, the ICDX also launched a gold futures contract to create a local bullion benchmark.
This launch too, has not been problem free.
"We see there is a challenge because of taxation structures in Indonesia," he said. "Currently, if you are going to import gold from offshore ... sellers have to pay 2.5 percent tax.
"That doesn't really give the market a more efficient structure to operate. Currently, we are working with regulators and talking with the government in order to re-consider the 2.5 percent."
Indonesia is one of the main gold consumers in Southeast Asia. As of Dec. 31, 2010, there had been 23,661 lots transacted on the ICDX gold futures contract.
Looking further ahead, the ICDX plans to launch a coal index in the second half of 2011 to tap growing trading of the fuel in the world's top exporter of thermal coal.
Widjaja said he expects to complete the coal contract specifications by the second quarter, with a possible third quarter launch this year.