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Malaysia palm oil exports set to rise following export tax suspension

Malaysia palm oil exports set to rise following export tax suspension

KUALA LUMPUR: Malaysia, the world’s second largest palm oil producer after Indonesia, may see its palm oil exports increase after its government suspends export taxes on crude palm oil (CPO) from Monday. Malaysian Plantation Industries and Commodities Minister Mah Siew Keong announced recently the suspension of export taxes on CPO for three months from Jan 8 Monday to April 7, in a bid to boost palm oil prices and reduce high stockpiles. The taxes removal, however, will end early if CPO stocks fall to 1.6 million tons.

According to Malaysian Palm Oil Board, Malaysia’s CPO export tax for January 2018 was 5.5 percent; Malaysia’s stockpile in November 2017 stood at a two-year high of 2.56 million tons. Analysts said the export taxes suspension is expected to improve Malaysia’s CPO exports competitiveness and give a short-term boost to its exports to major importers such as China and India. This will help boost CPO exports from Malaysia as it will be more competitive against Indonesian CPO exports, which are subject to a CPO levy of 50 U.S. dollar per ton,” said CIMB Research’s analyst Ng Lee Fang. She sees it as a positive move for Malaysian planters in the near term as based on the latest export taxes, it would allow CPO exporters in Malaysia to save 144 ringgit (36.1 U.S. dollar) per ton. We also believe that major consumers such as India and China will take this opportunity to buy more palm oil from Malaysia,” said MIDF Research’s analyst Alan Lim, adding that the demand from China is supported by pre-stocking activity ahead of the Chinese New Year in mid-February. Concurred with Lim, Public Investment Bank Research’s analyst Chong Hoe Leong believed the move will give a boost to Malaysia’s palm oil exports amid the upcoming Chinese New Year celebration.