KUALA LUMPUR : Malaysia will continue to keep export duty on crude palm oil suspended until April-end as the trade-reliant nation seeks to halt further decline in price of the commodity, the Ministry of Plantation Industries and Commodities said Friday.
However, the export tax could kick in earlier if domestic stockpile of palm oil falls to 1.6 million tons, the ministry said in a statement. The suspension of export duty on crude palm oil that came into effect from Jan. 8 was scheduled to run through Apr. 7.
Analysts said the extension could help boost foreign demand for the edible oil and further shrink inventory in Malaysia, which in turn could prop up prices of the commodity used in everything from snacks to cosmetics.
A survey of 25 plantation areas by CIMB Investment Bank estimates that crude palm oil output likely grew 6% to 1.42 million tons in March from February. Strong exports however, likely pushed inventory lower by 12% to 2.18 million tons, CIMB said in a recent investor note.
Malaysia has a multi-tier tax rate of between 4.5% and 8.5% for exports of crude palm oil that kicks in when prices exceed 2,250 ringgit ($524.35) a ton. Exports declined 13.2% month-on-month to 1.31 million tons in February, while output fell 15.7% to 1.34 million tons.
Inventory is likely to continue to decline until June on higher export demand to the Middle Eastern countries before Ramadan, said Public Bank Investment Bank’s analyst Chong Hoe Leong.
