Malaysia to boost tax free CPO quota

KUALA LUMPUR: Malaysia will increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with higher output in the next few months, government sources said, as the world’s No.2 supplier struggles to maintain its export momentum.

“We are doing this on a case-by-case basis for local firms since production is starting to rise in the second half of this year and exports are a bit slow,” said one government official who declined to be named due to the sensitivity of the issue.

“It is a stock management effort. This is in an interim response to Indonesia at the moment. We are still formulating a comprehensive response,” the source added.

The move will lift Malaysia’s total duty free CPO export quota to 5 million tonnes this year and comes after top importer India this month raised base import prices of refined palm oil in a move that encourages more crude palm oil shipments.

Both Malaysia and India are responding to last year’s move by top palm oil producer Indonesia to slash export taxes of refined palm oil — used as a cooking oil — and spur its own processing industry.

Malaysia says Jakarta’s export tax cut has eaten into its own refined palm oil shipments and hurts its processors — a concern similar to that voiced by India, which has spent billions to build the factories of its edible oil manufacturing sector. -- REUTERS