Malaysia Continues Review of Proposed Reduction in Palm Oil Export Tax – Commodities Minister, By Reuters

KUALA LUMPUR – Malaysia is currently assessing the feasibility of temporarily reducing its crude palm oil export tax, according to the Commodities Ministry, following Indonesia’s decision to lift an export ban that has unsettled the market.

As the world’s second-largest producer of palm oil, Malaysia aims to enhance its presence in the edible oil market amid disruptions from Russia’s invasion of Ukraine, which affected sunflower oil shipments, coupled with Indonesia’s earlier ban on palm oil exports that tightened global supplies.

Indonesia announced it would end the export ban starting Monday but will implement a domestic market sales requirement to secure the availability of cooking oil within the country.

Minister Zuraida Kamaruddin mentioned in a recent interview that her ministry has suggested lowering the export tax to a range of 4% to 6%, down from the current 8%. The finance ministry has established a committee to further evaluate this proposal.

In a statement on Friday, Zuraida confirmed that discussions with the finance ministry are still in progress. She noted that if the proposed temporary tax cut goes ahead, Malaysian exporters are likely to benefit significantly in the short term as international buyers may turn to Malaysian palm oil.

The ministry plans to keep a close watch on developments regarding Indonesia’s policy changes. Zuraida also indicated that while crude palm oil prices are expected to decline due to anticipated production increases, they will remain high until mid-2023 due to tight global supplies and strong demand from markets such as China.

Additionally, Zuraida highlighted that China’s demand for palm oil is expected to rise later this year as the country continues to reopen its economy following the COVID-19 pandemic. She suggested that the tight supply of edible oils and fats may improve by the fourth quarter of this year, though recovery is anticipated to be gradual, with more significant improvements likely in 2023.