KUALA LUMPUR: MEWAH Group, Malaysia's second biggest palm oil refiner, has revived the installation of its RM200 million refinery in Lahad Datu following the government's decision to restructure crude palm oil (CPO) tax.
Effective January 1, the export tax on CPO has been lowered to between 4.5 per cent and 8.5 per cent, from the previous average of 23 per cent. It is being fixed on a monthly basis.
The CPO tax re-structure has, to a certain extent, allowed refiners in Malaysia to market cooking oil, oleochemicals, specialty fats and biodiesel at competitive prices in the global marketplace.
Singapore stock exchange-listed's Mewah International Inc's planned Lahad Datu refinery had been left idle for more than a year.
Back in October 2011, the Indonesian government created an unlevel playing field when it widened the export tax gap between crude and refined palm oil there.
As the second biggest player in Malaysia after Wilmar Group, Mewah Group has the capacity to process 2.8 million tonnes of palm oil a year.
"Now that Malaysian government has finally responded by restructuring the CPO tax to make it favourable for refiners here, the Lahad Datu plant is being revived," a source said.
"It's quite a sizeable refinery, at 2,000 tonnes per day. When it is commissioned towards the end of the year, Mewah's total annual refining capacity in Malaysia will swell from 2.8 million to 3.3 million tonnes," the source said when met at the ICIS Asian Oleochemicals Conference here yesterday.
The two-day conference is being organised by UK-based Reed Business Information. Also present at the conference were KLK Oleochemicals Group managing director A.K. Yeow and Khoo Kiak Kern, managing director of Desmet Ballestra Southeast Asia.
Desmet Ballestra, the global leader in edible oils technology, has gained much business as downstream investors in Indonesia and Malaysia put up more refineries and upgrade existing oleochemicals, specialty fats and biodiesel plants.
"The job orders for refineries in Indonesia are super-sized. We are talking about those that are capable of churning out 2,000 tonnes of oil per day, so as to reap economies of scale," said Khoo.
"Similarly, the new oleochemical plants are much bigger, some of which designed to produce 500 tonnes a day."
Energy efficiency and water-saving features are also incorporated into the new plant designs, Khoo added.