MUMBAI: Malaysia, the world’s second-biggest palm oil producer, could extend duty free exports until the end of 2014 if prices of the tropical oil remain at current levels, a leading palm oil producer told Reuters in an interview.
Malaysia has allowed duty free exports of crude palm oil for September and October. A further extension in duty free exports would help it reduce stockpiles but also put pressure on rival top producer Indonesia to consider similar measures.
Indonesia has allowed duty free exports for October in response to the Malaysian duty structure.
“If prices remain at the current level, then Malaysia could allow duty free exports in November and December,” Mohd Emir Mavani Abdullah, chief executive officer of the world’s third-largest palm plantation operator Felda Global Ventures Holdings Bhd, told Reuters.
Both Malaysia and neighbour Indonesia set export taxes on a monthly basis. In August, Malaysia’s export duty for crude palm oil was 5 percent, while Indonesia has set its September rate at 9 percent compared with 10.5 percent in August.
Malaysian palm oil futures settled at 2,177 Malaysian ringgit ($668.40) per tonne on Friday, after hitting a 5-1/2-year low at 1,914 ringgit on Sept. 2.
Palm oil has fallen a quarter since its March peak of 2,916 ringgit. The duty free exports have been helping in bringing down stockpiles in Malaysia, Mohd Emir said.
Felda Global is planning to enter India, the world’s biggest importer of palm oil, by setting up a port-based refinery with a local partner, said Mohd Emir, who was in Mumbai for a Globoil India conference.
“We are examining a couple of proposals now,” he said.
India’s palm oil imports in the 2014/15 marketing year starting in November are forecast to surge to 9 million tonnes, compared with 2.6 million tonnes in 2005/06.
Industry officials like Dorab Mistry of India’s Godrej Industries believe India’s imports would rise significantly in coming years due to stagnant local production and rising demand.
Felda Global has been examining a few proposals by Indian companies and could finalise a partner for the refinery by the end of this year after approval from its board, Mohd Emir said.
India’s duty structure favours imports of crude palm oil over refined product, so it makes sense to have a refinery in India, he said.
Indian refiners are seeking a 15 percent higher import duty on refined palm oil over crude to arrest the flow of refined palm products.
A Malaysian company is also planning to tie up with an Indian partner to cultivate oil palm in India, which has been struggling to raise production in southern states, Mohd Emir said. -Reuters
Source : The Star