Palm oil exports to do better this year

PUTRAJAYA: PALM oil exports for this year are expected to improve as prices are beginning to climb, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said.

The restructuring of the crude palm oil (CPO) taxes also means better prospects for the exports.

“We should be able to do better than last year’s palm oil exports of RM71.5 billion. In 2012, palm oil prices were dragged down by a host of factors most of which were beyond our control. Now that we’ve restructured our crude palm oil (CPO) taxes, the prospects of higher exports lie ahead,” he said at the “Reach and Remind Friends of The Industry Seminar and Dialogue 2013” held here yesterday.

Since the start of the year, the government had set an export tax of between 4.5 per cent and 8.5 per cent on CPO versus 23 per cent previously. There is no tax on CPO, however, if the price dips below RM2,250 per tonne.

Palm Oil Refiners’ Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad, who was also at the seminar, concurred with the minister that brighter days lie ahead for refiners. “Our members are seeing better margins as they ramp up production,” he said.

Last week, the Indonesian government raised the CPO export tax to nine per cent for February from 7.5 per cent in January.

Jaaffar responded that this move could be a blessing for refiners here because it would mean CPO in Malaysia will be cheaper than Indonesia’s and this will spur interest from CPO-importing countries.

“More imports will mean less CPO stock in the country, which will ultimately raise the price of CPO. What we need now is to reduce our stock level to the manageable level of two million tonnes,” he added.

To a query if March is deemed to be another month of zero export tax on CPO, Dompok replied that palm oil prices seemed to have bottomed out and the only way prices can move is up. “Prices have started to improve in the last two weeks. Last Friday, it closed above the tax threshold of RM2,250 per tonne on the physical market,” the minister said.

Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.

Last week, Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad urged the government to quickly implement the use of B10 biofuel so as to help lift weak CPO prices.

When asked to comment. Dompok said the government has spent over RM80 million to set up blending facilities nationwide. He then clarified that these facilities will be operational by mid-2014 and not by the end of this year.