Datuk Seri Mah Siew Keong:
KUALA LUMPUR: Malaysia, the world's second-largest palm oil producer, will suspend export taxes on crude palm oil for a three-month period starting on Jan. 8 to boost prices and reduce high stockpiles, a government minister said on Friday.
The export tax suspension will be lifted before the three-month period if crude palm oil stocks fall to 1.6 million tonnes, Malaysia's minister of plantation industries and commodities Datuk Seri Mah Siew Keong said at a press conference.
"The implementation of this scheme is to reduce palm oil stocks and strengthen palm oil prices," said Mah, adding that he expected stocks to continue to increase in 2018.
"(The scheme) is one of the short-term pre-emptive measures by the government to manage the fall in crude palm oil prices, so that the smallholders' (small-scale farmers) incomes are not impacted and the country's oil palm industry continues to be competitive," he said.
Palm oil inventories in Malaysia, the second-biggest producer after Indonesia, had already risen to a near two-year high at end-November, squeezing benchmark prices to a 16-month low in mid-December.
Official data showed November stocks grew 16 percent to 2.56 million tonnes from October on weak exports. Inventories are forecast to rise 5.1 percent on-month to 2.69 million tonnes at end-December - the most in more than two years - according to a Reuters poll.
Palm shed nearly 20 percent of its value in 2017, and was last up 0.9 percent at 2,609 ringgit on Friday afternoon.
Exports however, which saw a sharp monthly decline in November, are forecast to improve in the coming months as key buyers such as India and Europe replenish supplies and as China stocks up ahead of the Lunar New Year festival.
Malaysia usually calculates a reference price to determine the crude palm oil export duty rate for each month, whereby a price above 2,250 ringgit incurs a tax.
Its last calculated reference price for January was RM2,623.31 per tonne, effectively incurring a 5.5 percent tax rate. - Reuters
Subscribe or renew your subscriptions to win prizes worth up to RM68,000!
