Removal of duty a boost for palm oil exporters

LOCAL exporters of processed palm oil will be further encouraged to increase their exports with the proposed abolishment of export duty on crude and refined, bleached and deodorised (RBD) palm olein under Budget 2004. 

Malaysian Palm Oil Association chief executive M.R. Chandran said the proposal would help regularise the exports as well as provide more opportunities, especially for RBD palm olein exporters, to boost exports to major importing countries such as India and Pakistan. 

This move augured well as India, a major traditional market, had recently reduced import duties on processed palm oil, he said. 

“To further capitalise on exports, Malaysian exporters can come to some marketing strategy or alliance with Indian palm oil refiners to create a win-win situation that will benefit both parties in the long term,” said Chandran. 

India is expected to purchase more processed palm oil than crude palm oil as the gap between import duties on CPO and RBD palm oil has narrowed substantially, from 22.4% to the current 5%. 

“Given the anticipation of higher processed palm oil exports to India, this could translate into potentially higher refining volume and profits to Malaysian local refiners,'' Chandran said.  

Currently, crude and RBD palm olein attract a 5% export duty. 

Malaysia primarily exports processed palm oil to India, while Indonesia is the major exporter of CPO.  

Last year, only 11% of Malaysian palm oil exports were in the form of CPO.  

Plantation analysts also believe that it makes more sense for Malaysia to sell processed palm oil rather than CPO because, on the average, an additional profit of RM20-RM25 per tonne could be made. 

On the proposed incentives and tax exemptions for oil palm biomass activities, Chandran said: “It will be interesting to note that Malaysian plantation companies which have abundance of empty fruit bunches and palm trunks (when they do replanting) can finally commercialise these normally discarded items.”