KUALA LUMPUR, Sept 4 (Bernama) -- The government is providing exemption on crude palm oil (CPO) export duty to all exporters for September and October 2014, effective Sept 1, to mitigate further decline in the price.
Plantation Industries and Commodities Minister, Datuk Amar Douglas Uggah Embas, said with this measure, the export of CPO was expected to increase by 600,000 tonnes within the two months.
"Taking into account the expected stock level of up to 2.2 million tonnes, this tax exemption should be able to reduce the level to 1.6 million tonnes by year-end," he told a media conference here Thursday.
According to an industry source, if no effective action was taken, the stock level of CPO would reach between two and 2.2 million tonnes by year-end.
The highest average price of CPO for 2014 was in March at RM2,855.00 per tonne.
However, starting from the end of first quarter of 2014, the CPO price has progressively declined.
The lowest price for 2014 was RM1,933.50 per tonne on Sept 2, 2014.
Uggah said if no action was taken to address this trend, the ministry expected further declining price until the end of this year with average price of between RM2,200 and RM2,280 per tonne.
"In this case, the tax incentive is the best instrument to promote the export of CPO and reduce CPO stocks in the country," he said.
CPO export duty rate for September 2014 is gazetted at 4.5 per cent.
Rates are set based on the average price of CPO for the last 15 days of July and the first 15 days of August.
CPO export duty rates are set in October by the same method but using CPO prices for the last 15 days of August and the first 15 days of September.
Uggah said after October, the government would see the impact of the export duty exemption.
"The industry may ask to move up till December. We would assess from time to time whether it would be continued," he said.
Most importantly, Uggah said, the industry supported more than 200,000 smallholders and it was vital to make sure that CPO prices were not below their costs.
Uggah also dismissed allegation that Malaysian CPO tax structure mirrored the Indonesian structure saying that: "Ours are pragmatic. We do not follow Indonesia. We try to strike a balance."
Meanwhile, Uggah said his ministry was in the midst of preparing a cabinet paper proposing to the government to implement the B7 Programme by December this year.
B7 Programme is the blending of seven per cent palm oil biodiesel with petroleum diesel and this measure would increase CPO consumption by another 700,000 tonnes a year.
"Now we're at B5. It is not difficult to move to B7 because our blending system is sophisticated," he said.
Uggah said the cabinet was expected to make decision within this month.
B7 was originally planned to be implemented end of first quarter next year.
Plantation Industries and Commodities Minister, Datuk Amar Douglas Uggah Embas, said with this measure, the export of CPO was expected to increase by 600,000 tonnes within the two months.
"Taking into account the expected stock level of up to 2.2 million tonnes, this tax exemption should be able to reduce the level to 1.6 million tonnes by year-end," he told a media conference here Thursday.
According to an industry source, if no effective action was taken, the stock level of CPO would reach between two and 2.2 million tonnes by year-end.
The highest average price of CPO for 2014 was in March at RM2,855.00 per tonne.
However, starting from the end of first quarter of 2014, the CPO price has progressively declined.
The lowest price for 2014 was RM1,933.50 per tonne on Sept 2, 2014.
Uggah said if no action was taken to address this trend, the ministry expected further declining price until the end of this year with average price of between RM2,200 and RM2,280 per tonne.
"In this case, the tax incentive is the best instrument to promote the export of CPO and reduce CPO stocks in the country," he said.
CPO export duty rate for September 2014 is gazetted at 4.5 per cent.
Rates are set based on the average price of CPO for the last 15 days of July and the first 15 days of August.
CPO export duty rates are set in October by the same method but using CPO prices for the last 15 days of August and the first 15 days of September.
Uggah said after October, the government would see the impact of the export duty exemption.
"The industry may ask to move up till December. We would assess from time to time whether it would be continued," he said.
Most importantly, Uggah said, the industry supported more than 200,000 smallholders and it was vital to make sure that CPO prices were not below their costs.
Uggah also dismissed allegation that Malaysian CPO tax structure mirrored the Indonesian structure saying that: "Ours are pragmatic. We do not follow Indonesia. We try to strike a balance."
Meanwhile, Uggah said his ministry was in the midst of preparing a cabinet paper proposing to the government to implement the B7 Programme by December this year.
B7 Programme is the blending of seven per cent palm oil biodiesel with petroleum diesel and this measure would increase CPO consumption by another 700,000 tonnes a year.
"Now we're at B5. It is not difficult to move to B7 because our blending system is sophisticated," he said.
Uggah said the cabinet was expected to make decision within this month.
B7 was originally planned to be implemented end of first quarter next year.
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