Malaysia says no decision to extend palm oil export tax exemption beyond 2020

[KUALA LUMPUR] Malaysia has made no decision on whether to extend an export tax exemption on palm oil products after it ends on Dec 31, an official from the Plantation Industries and Commodities Ministry told Reuters on Monday.

The world's second largest palm producer in June fully exempted crude palm oil, crude palm kernel oil and processed palm kernel oil from export duty until the end of 2020 to encourage exports amid a coronavirus-induced demand slump.

"So far no decision to extend beyond 2020," ministry secretary-general Ravi Muthayah said in a text message.

The duty exemption gave Malaysian crude palm oil a competitive price advantage over rival Indonesian crude palm oil, but eroded refiners' margins.

The return of the export tax would make Malaysia's refined palm oil exports more competitive, said Julian McGill, LMC International's head of Southeast Asia.

"We should therefore see an increase in relative exports of refined palm oil from Malaysia," Mr McGill said.

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In the near term, companies will scramble to export crude palm oil before the export tax reappears in January, he added.

Industry players are now awaiting Indonesia's decision on whether to increase its own palm oil export levies.

Indonesia, the world's biggest palm producer and exporter, has said it plans to revise its export levy rules to allow higher collection when prices increase as part of moves to finance its ambitious biodiesel mandate.

"The palm oil spread in Indonesian and Malaysian offerings will be the key to palm oil export flow," said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Indonesia on Monday raised its export tax for crude palm oil shipments in December to US$33 per tonne from US$3 as reference prices increased.

REUTERS