Report on Palm Oil Tax Policy Flip-flop ‘mischievous’

KUALA LUMPUR: Plantation Industries and Commodities Minister Tan Sri Bernard Dompok yesterday refuted reports implying Malaysia might have flip-flopped in its decision on palm oil tax.

“I don’t know who said that, it’s not me,” the minister retorted, when asked if the government may have changed its mind and decided to carry on issuing duty-free CPO (crude palm oil) export quotas after December.

Dompok, who was clearly irate over the confusion and undue anxiety the news report had caused among vegetable oil traders, said the unidentified person who claimed that Malaysia had a policy reversal “is mischievous”. 

“We stick to what we have announced. There’s no deviation,” Dompok told Business Times on the sidelines of the Palm Oil Trade Fair and Seminar (POTS) 2012, organised by the Malaysian Palm Oil Council, here, yesterday.

The minister once again confirmed that Malaysia will adopt a flexible CPO export tax structure that mimics Indonesia’s from January 1. 

Malaysia will also abolish duty-free CPO export quota. 

The new CPO export duty will fluctuate on a monthly basis, between 4.5 per cent to 8.5 per cent, from 23 per cent currently. 

If palm oil price hovers between RM2,250 and RM2,400 a tonne, the tax is 4.5 per cent. And if the palm oil prices were to jump to RM3,450 per tonne, the tax is 8.5 per cent.

Dompok, while noting refined palm oil will remain tax-free, said the government is committed to ensuring that downstream players have a level playing field and not suffer in the hands of refineries from another country from 2013.

Palm Oil Refiners Association of Malaysia (Poram) chairman, Wan Mohd Zain Wan Ismail, who was also at the conference, said the reports suggesting Malaysian plantation companies with overseas refineries had asked the government to reconsider its policies had caused much confusion among traders.

“That’s not true, it was mischievous reporting,” he said.

Since September 11 last year, Poram members have had to face many stressful days after the Indonesian government widened the tax gap between crude and refined palm oil. This made CPO and crude palm kernel oil very cheap for downstream businesses in Indonesia. 

On top of that, processed palm oil in the form of cooking oil, soaps and detergents shipped out from Indonesian shores are tax free.

The Indonesian government’s move, since October 2011, created an unfair playing field, rendering refiners in Indonesia to reap fat profits while those in Malaysia suffered losses.

In protecting its members’ interest, Poram suggested to the Malaysian government to lower the current 23 per cent CPO export tax and do away with duty-free CPO. 

It suggested that by mirroring the tax margin between Indonesia’s CPO and refined palm oil, Malaysia’s refiners can at least stand a chance to compete based on existing infrastructure and plant efficiency.

Source : Business Times

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