Malaysia to Cut Tax on Crude Palm Oil reports SL Info
Move to help relieve overflow of supply
The Southeast Asian country has calculated a reference price of RM2,147.81 per tonnage for crude palm oil for January, setting the expert duty for the oil at zero in line with the expectation of the market.
Malaysia had released a statement in October, which noted it would reduce the taxes on export for the oil from 23% while setting a monthly basis to reflect prices. This was done to respond to the top Indonesian tax reforms which has all but removed the market share.
Based on the price calculated used to set the average sale price, the market had expected a 0% tax in order to help exports move more palm oil. By cutting the tax, it also cuts into the overflow of stock, which sits currently at 2.56 million tons.
“The new tax structure allows local sellers to ship out crude palm oil. Previously they were forced to sell locally because they couldn’t export, they didn’t have the quota,” said a trader with a foreign commodities brokerage in Malaysia.
“But now (this move) eases the pressure for local crude palm oil sellers. They have two outlets now, they can deal locally, they can do exports. We can expect to see additional sellers coming up just to sell exports.”
The move could mean additional demand from China for crude grade from Malaysia. China is currently the second largest buyer of the oil, and also currently has imposed stricter measures of quality on the refined imports.
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