Malaysia may Cut Palm Oil Export Tax

Malaysia is considering cutting its export tax on palm oil and plans to slow implementation of its biodiesel mandate to help meet global demand amid an edible oil shortage, Plantation Industries and Commodities Minister Zuraida Kamaruddin told Reuters on May 10.  The ministry has already proposed the cut to the finance ministry, which has set up a committee to look into the details.  The cut would likely be temporary, and decision could be made as early as June, Zuraida said.

Malaysia, the second biggest producer and exporter of palm oil after Indonesia, is looking to increase its share of the edible oil market after the conflict between Ukraine and Russia disrupted sunflower oil shipments and Indonesia banned palm oil exports that has further tightened global supplies.  Zuraida said importing countries have asked Malaysia to reduce its export taxes, and some like India, Iran, and Bangladesh were proposing barter trade.   Malaysia will also slow the implementation of its B30 biodiesel mandate to prioritize supply to food industries, she said.

In a related development, the Solvent Extractors’ Association of India (SEA), has said the combination of lower export taxes and the Indonesian ban on palm oil exports may mean Indonesia’s share of palm oil exports to India will fall to 35 percent in the current marketing year ending on October 31 this year.  This will be a reduction from more than 75 percent a decade ago, the group estimated.