Malaysia may cut palm oil export tax amid global supply crisis

• Malaysia is considering cutting its export tax on palm oil and plans to slow the implementation of its biodiesel mandate to help meet global demand amid an edible oil shortage, its commodities minister told Reuters on 10 May 22.
• Plantation Industries and Commodities Minister Zuraida Kamaruddin said in an interview her ministry has already proposed the cut to the finance ministry, which has set up a committee to look into the details.
• Malaysia, the world’s second-largest palm oil producer, could cut the tax to 4% to 6% from the current 8%, she said.
• The cut would likely be temporary and a decision could be made as early as Jun 22, Zuraida said.
• Malaysia is looking to boost its share of the edible oil market after Russia’s invasion of Ukraine disrupted sunflower oil shipments and Indonesia’s move to ban palm oil exports further tightened global supplies.
• The proposal also asked the Finance Ministry to expedite the tax cut for state-linked palm oil producer FGV Holdings – Malaysia’s largest – and companies with overseas oleochemical production, she said.
• Malaysia will as well slow the implementation of its B30 biodiesel mandate, which requires a portion of the nation’s biodiesel to be mixed with 30% of palm oil, to prioritise supply to global and domestic food industries, she said. “We have to prioritise to give food to the world first,” Zuraida said.
• The benchmark palm oil contract fell as much as 2.3% in the morning session on 10 May 22, paring some losses after the Reuters report on a possible cut to the export tax.
• Zuraida said buyers India, Iran and Bangladesh are proposing to barter agriculture products like rice, wheat, fruits and potatoes for Malaysian palm oil.
• Malaysia’s production has been strained for more than two years due to a severe labour crunch following coronavirus border curbs that halted the entry of migrant workers.
• With travel curbs now being eased, foreign workers will start arriving in mid-May 22, Zuraida told Reuters ahead of her visit to the United States later this week.
• The U.S. Customs and Border Protection has imposed import bans on two Malaysian palm oil producers – FGV and Sime Darby Plantation – over allegations that they use forced labour in the production process.
• Both companies have commissioned independent audits to look into the allegations and have said they will work with U.S. authorities.
• Zuraida said that during her visit she will request U.S. Customs to detail their findings of alleged labour abuses and give Malaysian firms time to fix the issue before imposing sanctions.
• “We are not discounting the possibility of this happening, but you should give us time to rectify,” she said.

External Link : https://www.reuters.com/business/energy/exclusive-malaysia-may-cut-palm-oil-export-tax-amid-global-supply-crisis-2022-05-10/