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Author: savemalaysia   |   Latest post: Thu, 5 Dec 2019, 9:56 PM


Malaysia likely to continue CPO export duty exemption

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KUALA LUMPUR, Nov 21 — The Malaysian government will likely continue with the crude palm oil (CPO) export duty exemption next year to keep commodity prices competitive, says an expert.

In May this year, Primary Industries Minister Teresa Kok announced that the Finance Ministry (MoF) had agreed to place a tax exemption on the export duty on CPO, but only effective from May 1 to December 31, 2019 to encourage exports of the commodity.

Commenting on that, Singapore-based Palm Oil Analytics owner and co-founder Sathia Varqa believed, should Malaysia, which had set a lower CPO export duty rate for 2020, reimpose the tax, the price discount difference between local and Indonesia’s CPO would be even higher, rendering the latter’s prices much cheaper in the global market.

“Currently, the local CPO prices are already higher than Indonesia’s by US$25-30 per tonne.

“So I do not think Malaysia will do it (reimpose the CPO export tax) or, they will wait and see what Indonesia is going to do,” he told Bernama on the sidelines of the three-day Malaysian Palm Oil Board International Palm Oil Congress and Exhibition 2019 here today.

Last month, MoF announced that it would reduce the CPO export duty rate to three per cent from the current 4.5 per cent when prices fall between RM2,250 and RM2,400 per tonne in 2020.

It said the export duty rate would increase to 4.5 per cent when the prices go up to RM2,401 to RM2,550 per tonne, and if it hit more than RM3,450 per tonne, the rate would be raised by 0.5 per cent to eight per cent.

Meanwhile, Sathia expected Malaysia’s CPO futures active month contract to hit RM3,000 per tonne in the first half of 2020, up from the current active month contract of February, which closed at RM2,685 per tonne on November 20, 2019.

He said this would be mainly supported by the biodiesel mandate that both Indonesia and Malaysia have over 11 million tonnes of CPO globally.

Malaysia will introduce the B20 biodiesel programme next year starting with Langkawi and Labuan, and implemented nationwide by end 2020, while Indonesia is expected to introduce B30 biodiesel as early as January next year. 

“The price in November has been very bullish, and the futures market is really driving up the physical prices too,” he said, adding that the last time CPO futures touched the RM3,000 level was in 2016, following the El Nino phenomenon in 2015 which hampered commodity production. — Bernama



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