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The Malaysian government is weighing a strategic suspension of export duties on crude palm oil as a mechanism to accelerate international shipments and alleviate the pressure of record-high domestic inventories. According to reports from Bloomberg, senior officials at the Ministry of Plantation and Commodities are scheduled to convene with major industry stakeholders to deliberate on a temporary lifting of the current levy.
This potential policy shift follows a significant ballooning of palm oil stocks in Malaysia, the world's second-largest producer, which reached record levels in September. The inventory surge comes even as the industry braces for the impact of El Niño, with sweltering weather conditions threatening to diminish crop yields in the coming months.
Under the existing fiscal framework, Malaysia employs a multi-tiered tax structure for crude palm oil exports, ranging from 3.0% to 10%. These duties are triggered once market prices exceed RM2,250 per tonne, with the maximum 10% rate enforced when prices surpass RM4,050. For the month of November, the duty remained fixed at the 10% ceiling based on a calculated reference price of RM4,323.78 per tonne.
Industry analysts suggest that if the waiver is approved, it could significantly bolster Malaysia's competitive edge against Indonesia. Indonesia recently increased its combined export tax and levy to US$308 per tonne for October, providing Malaysia with a window to regain lost market share by offering more competitive pricing to global buyers.
Source: The Edge Malaysia