‘LOCAL CPO EXPORT DUTY MUST MATCH INDONESIA’S’
Local refiners facing unlevel playing field, says association
MALAYSIA should quickly review the current crude palm oil (CPO) export duty structure to match with that of Indonesia’s, if the government is committed to encouraging more value-added downstream businesses and raise the country’s exports.
Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Teoh Beng Chuan said since Malaysia’s CPO export duty structure did not match with Indonesia’s, refiners in Malaysia had faced unlevel playing field for more than three years with palm oil prices trading at subdued levels.
“Manufacturers of cooking oil, oleochemical, specialty fats and biodiesel producers here are facing unfair competition in the export market and losing market share as Malaysia’s CPO export duty structure does not match with that of Indonesia’s,” said Teoh on the sidelines of Market Forum 2018 organised by the Malaysian Palm Oil Council, here, yesterday.
Currently, the CPO export duty structure fluctuates on a monthly basis at between 4.5 and 8.5 per cent. If palm oil prices hover between RM2,250 and RM2,400 a tonne, the tax is 4.5 per cent. If the prices are between RM2,550 and RM2,700 a tonne, planters will be taxed 5.5 per cent.
Teoh assured that exports of refined palm oil, however, were not taxed.
In the last three years, the global benchmark pricing for palm oil on Bursa Malaysia Derivatives Market dropped by some 30 per cent from RM3,000 per tonne to RM2,100. At press time yesterday, the third month palm oil futures traded RM5 higher at RM2,199 per tonne.
“We urge the government to quickly amend Malaysia’s CPO export duty structure to match that of Indonesia’s.
“Once this is set in place, refiners here would stand a better chance to buy more CPO and reduce the current high stock levels in the country,” he said.
“This will spur refining activities and players would be able to reap economies of scale and make some money to stay in the business,” he added.
In July 2015, Indonesia implemented a new export levy of between US$10 and US$50 (RM40.7 and RM203.5) per tonne for various palm oil products.
This is on top of the revised export taxes that Indonesian palm oil producers are required to pay when CPO prices exceed US$750 per tonne.
This export levy lowered the domestic CPO price in Indonesia by between US$30 and US$50 per tonne, fattening profit margins of refiners in Indonesia.
So, for the past three years stakeholders throughout the palm oil value chain in Malaysia have been suffering from dampened pricing.