Malaysia will cut export taxes on palm oil to between 4.5%-8.5% from 23%, effective Jan. 1, government says; tax cut aimed at helping nation compete with other palm oil exporting countries in terms of prices

Nevin Barich

KUALA LUMPUR, Malaysia , October 12, 2012 (press release) – The Government has agreed to implement a number of measures to strengthen the competitiveness of the palm oil industry. This is following the decline in palm oil prices since September 2012 and increase in domestic palm oil stocks.

Effective 1 January 2013, the Government will implement a reduced export duty structure for crude palm oil (CPO). The reduction of export duty for CPO will allow the palm oil industry in Malaysia to compete with other palm oil exporting countries in terms of prices. In addition, implementation of reduced export duty on CPO will also allow the refineries in Malaysia to market their products at competitiveness prices to the global markets. In tandem with reduced CPO export duty, the Government will discontinue with the duty free CPO export facility beginning 1 January 2013.

In addition to this measure, the Ministry of Plantation Industry and Commodities (MPIC) is in consultation with the relevant parties to implement the B10 Programme (blending of 10%
palm oil biodiesel with petroleum diesel) for the unsubsidised sector. This measure will increase the consumption of CPO by another 300,000 tonnes a year. Currently, the B5 Programme (blending of 5% palm biodiesel and 95% of petroleum diesel) has been implemented in the Central Region covering Selangor, Melaka, Negeri Sembilan and Wilayah Persekutuan Kuala Lumpur and Putrajaya. The B5 programme in the Central Region utilises 112,000 tonnes of CPO annually.

MPIC is also considering the proposal to provide incentives for replanting of old and unproductive palm trees. In this context, it is estimated that a planted area of 100,000 hectares
needs to be replanted and this is envisaged to reduce supply of 300,000 tonnes of CPO.

MPIC will continue with measures to strengthen the competitiveness of the palm oil industry to ensure the growers receive remunerative income. In this context, focus will also be given towards assisting the growers, in particular the smallholding sector which account for close to 40% of the total planted area of 5 million hectares.

Ministry of Plantation

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