The Malaysian crude palm oil (CPO) export tax policy that is unchanged since the 1970s will likely see a downward revision to between 8% and 10% from the current 23%.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said he would present a proposal to the cabinet tomorrow, and the proposal is understood to contain several measures to help stabilise the current CPO price that has slumped on concerns of the rising palm oil stocks that would outpace future demand.
“I think this (lowering of CPO export duty) will put us in a very much competitive position as the difference will be the same as Indonesia, which has a 13.5% export tax,” he said at the ministry's get-together with the media.
He expects the proposed CPO export tax revision to spur exports as Malaysia's current tax structure was not attractive for export purposes when compared with Indonesia's accommodating export taxes.
Palm oil futures fell to as low as RM2,230 per tonne in intraday trade yesterday, hitting the lowest level for most-active contract since November 2009 but rebounded to close at RM2,351 per tonne.
Given the current circumstances on the CPO market, Dompok said his ministry would also consider accelerating further the export of duty-free CPO.
“Currently, we have approved five million tonnes of CPO for duty-free export out of 19 million and only half of it have been utilised. Those companies which have not used up their quotas will be asked to surrender the quota to companies which are able to export,” he added.
Since late last year, local palm oil refiners affected by Indonesia's move to slash by more than half its export duty on refined palm oil products have been calling for a revision on Malaysia's CPO export duty policy and entirely abolish the current duty-free CPO export quota.
An industry source said: “It will make no big difference if the Government lower the CPO export duty but still retain the duty-free CPO export quota which will benefit only big plantation companies with refineries overseas.”
Dompok also said the ministry would work on an incentive programme to encourage replanting of about 100,000 hectares of oil palm trees that were more than 35 years old.
“This incentive will cut off about 300,000 tonnes of CPO in the market when the replanting scheme is put in place” he said.
The initiative is understood to target larger estates and not the ones owned by smallholders.
He pointed out that with the high prices previously, growers were not inclined to replant despite the trees being non-productive but with the incentive, it would promote replanting and grow the industry in the longer term.
Earlier, Dompok is believed to have call for an urgent meeting at his office in Putrajaya with officials from the oil palm-related bodies seeking their views on finding the best measures to help support the current low CPO prices.
The meeting was understood to have been attended by top guns from Malaysian Palm Oil Council, Malaysian Palm Oil Board, Malaysian Palm Oil Association which represents the big plantation companies, Palm Oil Refiners Association of Malaysia and the Malaysian Biodiesel Association.
Dompok also said that there was no reason for Malaysia not to open talks with Indonesia on ways to stabilise CPO prices in the future.
“We will also take a look back at the country's biofuel programme and will expedite the B5 programme to B10, doubling the biodiesel content utilised by the Government's agencies vehicles,” he added.
Dompok also revealed that the total value of commodity export and commodity-derived products exports for January to June fell by 5.63% to RM64.4bil from RM68.3bil in the previous corresponding period, out of which palm oil exports fell by 5.62% to RM37.26bil from RM39.48bil.