Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Exclusive-Malaysia may cut palm oil export tax by half amid global supply crisis

Commodities May 10, 2022 05:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A worker unloads palm oil fruit bunches from a lorry inside a palm oil mill in Bahau, Negeri Sembilan, Malaysia January 30, 2019. REUTERS/Lai Seng Sin

By Mei Mei Chu and A. Ananthalakshmi

KUALA LUMPUR (Reuters) -Malaysia's commodities ministry has proposed cutting the export tax on palm oil by as much as half to help fill a global edible oil shortage and grow the market share of the world's second-largest palm oil producer.

Plantation Industries and Commodities Minister Zuraida Kamaruddin said in an interview with Reuters on Tuesday her ministry has proposed the cut to the finance ministry, which has set up a committee to look into the details.

Malaysia could cut the tax, likely a temporary measure, to 4%-6% from the current 8%, Zuraida said.

A decision could be made as early as June, she said.

Malaysia is looking to boost its share of the edible oil market after Russia's invasion of Ukraine disrupted sunflower oil shipments and Indonesia's move to ban palm oil exports further tightened global supplies.

"During these times of crisis, probably we can relax a little bit so that more palm oil can be exported," Zuraida said.

The proposal also asked the Finance Ministry to expedite the tax cut for state-linked palm oil producer FGV Holdings - Malaysia's largest - and companies with overseas oleochemical production, she said.

Malaysia will as well slow the implementation of its B30 biodiesel mandate, which requires a portion of the nation's biodiesel to be mixed with 30% of palm oil, to prioritise supply to global and domestic food industries, she said.

"We have to prioritise to give food to the world first," Zuraida said.

Palm oil - used in everything from cakes to detergent - accounts for nearly 60% of global vegetable oil shipments and the absence of top producer Indonesia has roiled the market.

The benchmark palm oil contract fell as much as 2.3% in the morning session on Tuesday, paring some losses after the Reuters report on a possible cut to the export tax. [POI/]

Zuraida told Reuters importing countries have asked Malaysia to reduce its export taxes.

"They feel it is too high because of the high costs across the supply chain, because of the price of edible oil," she said.

Crude palm oil futures have surged about 35% so far this year to all-time highs, further worsening global food inflation.

The Food and Agriculture Organization has warned that food prices, which hit a record high in March, could rise by up to 20% as a result of the Russia-Ukraine war, raising the risk of increased malnutrition. [L5N2VE39W]

Zuraida said buyers India, Iran and Bangladesh are proposing to barter agriculture products like rice, wheat, fruits and potatoes for Malaysian palm oil.

Malaysia's production has been strained for more than two years due to a severe labour crunch following coronavirus border curbs that halted the entry of migrant workers.

With travel curbs now being eased, foreign workers will start arriving in mid-May, Zuraida told Reuters ahead of her visit to the United States later this week.

The U.S. Customs and Border Protection has imposed import bans on two Malaysian palm oil producers - FGV and Sime Darby Plantation - over allegations that they use forced labour in the production process.

Both companies have commissioned independent audits to look into the allegations and have said they will work with U.S. authorities.

Zuraida said that during her visit she will request U.S. Customs to detail their findings of alleged labour abuses and give Malaysian firms time to fix the issue before imposing sanctions.

"We are not discounting the possibility of this happening, but you should give us time to rectify," she said.

Exclusive-Malaysia may cut palm oil export tax by half amid global supply crisis

Related Articles

Oil edges lower as supply disruption concerns ease
Oil edges lower as supply disruption concerns ease By Reuters - Aug 11, 2022 2

By Laura Sanicola and Muyu Xu SINGAPORE (Reuters) -Oil prices slipped in Asia on Thursday after gaining more than $1 in the previous session, as concerns over supply disruptions...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email