Sources said some palm oil firms like IOI Corp and state run plantation agency Felda received their quotas last week. The total quotas account for 15.5 per cent of projected output this year in Malaysia, the No.2 producer.

The move ends weeks of talk that Malaysia will scrap the quota, which has tightened regional supply for its refiners after Indonesia raised its export tax for the crude grade to jump-start its own processing industry.

Malaysian refiners struggle to compete against Indonesian rivals who enjoy better margins, with growing output and refined palm oil export taxes that were slashed last year to half that of the crude grade.

“The refiners have not been forgotten. The government is looking at providing incentives to refiners to encourage them to go further downstream and produce higher value products compared to Indonesia,” a government source said.

“The incentives will be done via special funding from the government. There will be an announcement at the end of this month,” added the source.

Local media said last week that the government will scrap the duty-free export quota for crude palm oil while maintaining 23 per cent export tax for the grade to safeguard the refining industry. Malaysia does not tax refined palm oil exports