KUALA LUMPUR, Jan 30 — Malaysia has delayed issuing quotas to export crude palm oil without taxes for 2012 as it drafts policy to counter competition from top supplier Indonesia, which slashed its export taxes for refined oil, sources told Reuters.
The delay by Malaysia, the world’s No. 2 producer, leaves more supply for local processors, but comes at a time when demand for Malaysian refined oil has fallen due to the cheaper prices of Indonesian edible oil.
“The Malaysian government usually issues the quotas in the last week of December but until now, nothing has been given out,” one of the sources at a local plantation firm said.
“We had been asking since December and the lack of action is affecting our business. This is why Malaysia’s exports are falling this month,” added the source who declined to be named as he is not authorised to speak to the media.
An official involved in the licensing process would not say when the government would issue quotas, but said: “We are formulating a framework that would be acceptable to all stakeholders in the Malaysian industry, be it the refiners or the plantations.”
Malaysia was exploring several options, including reducing its extremely high crude palm oil export tax to be on par with Indonesia and scrapping the quota system, industry sources say.
Cargo surveyor Societe Generale de Surveillance reported a near 20 per cent decline in January 1-25 Malaysia palm oil export from the same period a month ago, largely due to the absence of quotas.
Crude shipments alone slumped 75 per cent to 74,640 tonnes.
Benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange were down 0.4 per cent to RM3,122.
Malaysia imposes a very high crude palm oil export tax to protect its refining industry — the largest in the world — but also exempts a certain amount of oil from these export taxes. It does not tax its processed oil shipments.
Malaysia last year allocated 3.6 million tonnes of national crude palm oil output under the tax free quotas given to plantation firms such as Sime Darby and IOI Corp . That amount was 28 per cent of total production.
Refiners say the quota system is not transparent and is subject to abuse, with licence holders offering tax-free crude palm oil to domestic refineries, accusations planters deny.
The export quota system came under the spotlight last year, after Indonesia slashed its export tax on refined palm oil and raised tariffs for the crude grade to keep more of it in the country for processing.
Malaysian refiners now struggle to compete against Indonesian rivals who enjoy better margins of US$20-US$30 per tonne with growing national production and refined palm oil export taxes that are now half of that of crude palm oil.
Malaysia and Indonesia agreed in October to review their respective crude palm oil export taxes for the mutual benefit of the two producers. Malaysian government officials say they are still working out the details.
“Production in Malaysia is not growing as fast as Indonesia,” said a refiner who declined to be identified due to the sensitivity of the issue.
“If the government allows the export quotas this year, we will have tighter supply and higher domestic prices. We will have more negative margins,” he said. — Reuters
