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Public Investment Bank Bhd (PIVB) has reported that Malaysia is considering a proposed 10% export tax waiver for crude palm oil (CPO) in November. The measure is seen as a strategic move to manage excess supply and enhance the country's export competitiveness in the global market.
According to a research note from PIVB, the proposed waiver coincides with Malaysia's efforts to accelerate shipments as palm oil inventories remain elevated. A meeting between the Plantation and Commodities Ministry and key industry stakeholders is reportedly scheduled for today to deliberate on the implementation of the waiver.
PIVB anticipates that the move will be well-received by the industry and could be implemented shortly. The bank highlighted that waiving the CPO export tax would be instrumental in helping Malaysia reclaim market share from its regional competitor, Indonesia.
Furthermore, PIVB suggested that the tax waiver should remain effective until Malaysia’s national palm oil inventories drop below the 2 million tonne threshold. This strategy mirrors a previous policy in 2020, when Malaysia completely waived CPO export taxes for a period of six months.
However, the bank noted that the implications of the measure would vary across the value chain. While upstream producers are expected to benefit from robust export demand, downstream refiners and manufacturers might experience pressure on their margins due to higher costs for raw materials.
Source: Malaysia-China Insight