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Malaysia may allow duty-free crude palm oil export

KUALA LUMPUR: Malaysia has no plans to reduce its export duty on crude palm oil but may allow some companies to export the commodity duty-free, Primary Industries Minister Lim Keng Yaik said on Saturday.

"I have no plans to reduce the duty but I've got plans to allow certain companies to export crude palm oil without export tax for certain purposes," he told reporters.

"If the stocks are high, they can sell the crude to whoever they want," he said.

Last year Malaysia allowed five plantation firms to export crude palm oil duty-free due to a high domestic stock level.

Asked if the same five companies will again be given the previlege, Lim said, "We may widen that."

Export tax on crude palm oil is on a graduated scale starting with 10 percent on prices of above 600 ringgit a tonne. The duty currently stands at 140 ringgit per tonne, while crude palm oil was quoted at 1,110 ringgit a tonne on Friday.

Malaysia's palm oil stocks at the end of January stood at 1.19 million tonnes. The official Palm Oil Registration and Licensing Authority has forecast palm oil output to increase to 10.95 million tonnes this year from 10.55 million in 1999.

Indonesia, the world's second largest producer and exporter of palm oil after Malaysia, has also considered cutting crude palm oil export tax to three percent from 10 percent soon because of ample stocks and a bearish international market, a government source said this week.

Lim said he would visit India and China in April to discuss tax structure and import quotas respectively.

In December India raised the import duty on refined edible oils to 27.5 percent from 16.5 percent. Last month it announced that a special additional duty of four percent would applicable on palm oil imports.

Lim said he would also point out to China that the import quotas imposed on palm oil was benefiting soyoil as imports of soybeans were not subject to any restrictions.

"We have seen our market share in China dropping from as high as 70 percent to below 40 percent," he said.

He said he would also lead a marketing mission to Russia and Eastern European countries later this year to seek new markets for palm oil.

Lim also encouraged replanting of old oil palm trees which he said contributed to a decline in oil extraction rate to 18.6 percent in 1999 from 19.03 percent in 1997.

"According to our records, currently 473,000 hectares of oil palm need to be replanted," he said.-Reuters