Malaysia: M’sia willing to talk on CPO export duties with Indonesia

KUALA LUMPUR: Malaysia is open to negotiation with Indonesia on the possibility to harmonise the crude palm oil (CPO) export duties structure of both countries.

According to Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong (pic), a meeting has been scheduled between both Malaysian and Indonesian parties to discuss this issue in early 2017.

“When I say harmonise the CPO tax structure, it doesn’t mean Malaysia will compromise towards our disadvantages.

“We want to discuss with Indonesia on the possibility of having a common tax structure which does not conflict the trading of our palm oil in the world market,” explained Mah. 

Currently, the wide gap in Indonesia’s export duty differential between CPO and refined palm oil encourages more production of refined palm oil in the republic, which resulted in an increased competition with Malaysia particularly in the downstream sector.

Mah noted: “When you add in a new system, there will be some losses and benefits to the respective players, but we will try combine it to strike a balance for our overall exports.”

Meanwhile, Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron was reported as saying that a continuity of price undercutting by Indonesia stemmed the loss of market share for Malaysia would defeat the purpose of the Council of Palm Oil Producing Countries (CPOPC).

“The discounts offered by Indonesia over Malaysia for CPO/CPKO (crude palm kernel oil) is between US$15 and US$25 per tonne while that of refined bleached deodorised palm oil (RBD PO) and RBD palm olein is between US$30 and US$40,” said Dr Yusof in his paper on Malaysian Palm Oil: Creating New Drivers For Greater Global Market Penetration recently.

Malaysia and Indonesia which accounts for 85% of the world’s palm oil production, established CPOPC in November 2015 to strengthen the co-operation on palm oil issues as well as help to improve the welfare of smallholders, among others.

Towards this , Mah said both Malaysia and Indonesia will need to work closely through CPOPC in the marketing of palm oil and jointly fight the smear campaigns by anti-palm oil lobbyists.

“There are many anti-palm oil lobbyists in Europe and the US. They are unfairly painting palm oil as an unhealthy product which is very wrong. This is one of our major challenges for us,” added Mah.

On exports, palm oil market share in China fell to 45.7% in 2015 from 52% in 2014, while Indonesia’s market share rose to 53.9% from 47% in the same period.

However, Mah said Malaysia is looking at wooing back its traditional market in China, adding that Prime Minister Datuk Seri Najib Razak has continuously been engaging with the Chinese authorities to further boost Malaysia’s palm oil exports there.

“Prime Minister is helping the palm oil industry a lot. He is promoting it to the world leaders including China and Germany despite the current price-sensitive and market oriented situation,” said Mah.

Moving forward, he believes palm oil products have a great potential in the Middle East and Asean countries.

He also stressed on the significance of diversification into new products and securing new markets among local industry players.

“We want to go to the Middle East as well as Asean countries such as the Philippines and Vietnam. I am going to Iran this month (January) to negotiate on higher imports for our palm oil. These are the new markets,” Mah concluded

Source: http://www.thestar.com.my/business/business-news/2017/01/16/msia-willing-to-talk-on-cpo-export-duties-with-indonesia/