Malaysia to Slash CPO Export Tax

THE government plans to slash crude palm oil (CPO) tax to match the margin between crude and refined oil with that of Indonesia so that refiners here are better able to compete with rivals there.

Indonesia and Malaysia are the world’s top two CPO producers respectively.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said he will present to the Cabinet a proposal tomorrow to lower the CPO export tax to between eight and 10 per cent from the current 23 per cent.

“I think this will put us in a very much competitive position as the margin between crude and refined (palm oil) will match the 13.5 per cent tax gap in Indonesia,” he said at the ministry’s get-together with the media here yesterday.


In the last three weeks, CPO prices had plunged to below RM2,300 a tonne, its lowest in a year.

To stem falling prices, Dompok said the reduction of the CPO tax should make it easier for refiners in Malaysia to become more competitive in the market.

When the tax gap between crude and refined palm oil in Malaysia matches that of Indonesia, refiners here would stand a better chance to buy up more of the commodity and reduce the current high stock levels in the country.

As refining activities pick up, players would be able to reap economies of scale and make some money to stay in the business.
The minister also noted that for this move to be effective, there has to be curbing exports of duty-free CPO as well.

“Out of the quota of five million tonnes of duty free CPO we’ve allowed to be exported, only half has been utilised. I want the companies which have not used up their quotas to surrender back the approved permits,” he added.

Source : Business Times

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