Amid A Worldwide Supply Problem, Malaysia May Halve Its Palm Oil Export Tariff

Malaysia’s commodities ministry has proposed halving the export tariff on palm oil to help alleviate a worldwide edible oil shortfall and boost the country’s market dominance.

In an interview with Reuters on Tuesday, Plantation Industries and Commodities Minister Zuraida Kamaruddin said her ministry has requested the cut to the finance ministry, which has formed a committee to investigate the facts.

Malaysia might reduce the tax from 8% to 4% to 6%, which would be a temporary fix, according to Zuraida.

She stated that a decision might be made as early as June.

After Russia’s invasion of Ukraine delayed sunflower oil shipments and Indonesia’s decision to limit palm oil exports, Malaysia is trying to increase its position of the edible oil market.

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

According to her, the proposal also requested that the Finance Ministry hasten the tax decrease for state-linked palm oil producer FGV Holdings, Malaysia’s largest, and enterprises with foreign oleochemical manufacturing.

Malaysia would also delay the implementation of its B30 biodiesel requirement, which mandates a part of the country’s biodiesel to contain 30% palm oil, in order to prioritise supply to the global and domestic food industries, she said.

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

Palm oil, which is used in everything from cakes to detergent, contributes for over 60% of global vegetable oil shipments, and the market has been roiled by the absence of leading supplier Indonesia.

After Reuters reported on a possible cut to the export tax, the benchmark palm oil contract fell as much as 2.3 percent in the morning session on Tuesday, trimming some losses.

Importing countries have pushed Malaysia to lower its export levies, according to Zuraida.

“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 risen by approximately 35% to all-time highs this year, exacerbating global food inflation.

Food prices, which touched a record high in March, might climb by up to 20% as a result of the Russia-Ukraine conflict, boosting the danger of greater malnutrition, according to the Food and Agriculture Organization.

Buyers from India, Iran, and Bangladesh are seeking to trade grains, wheat, fruits, and potatoes for Malaysian palm oil, according to Zuraida.

Malaysia’s output has been stressed for more than two years due to a significant labour shortage caused by coronavirus border restrictions that have prevented migrant workers from entering the country.

Foreign labour will begin arriving in mid-May, according to Zuraida, who spoke to Reuters ahead of her trip to the United States later this week.

The US Customs and Border Protection has placed import prohibitions on two Malaysian palm oil companies, FGV and Sime Darby Plantation, amid claims of forced labour in the manufacturing process.

Both firms have hired independent auditors to investigate the allegations and have stated that they will cooperate with US authorities.

During her visit, Zuraida said she will ask US Customs to disclose their findings of alleged labour abuses and allow Malaysian companies time to correct the problem before applying fines.

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

(Adapted from

Categories: Economy & Finance, Geopolitics, Strategy, Sustainability, Uncategorized

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