KUALA LUMPUR, April 22 (Bernama) -- The Malaysian OleochemicalsManufacturers Group (MOMG) has proposed to the government that all CrudePalm Kernel Oil (CPKO), whether East or West Malaysia, whether crude orrefined, should have the same export duty.

MOMG suggested that for the long term benefit it should be zero percent,but for the short term purposes taking into consideration of a loss ofrevenue for the government, the export duty be capped between five and 10percent.

If the government would like to retain the duty differential between Westand East Malaysia, then MOMG proposes an additional income tax deductionamounting 25 percent of the cost of CPKO purchased from East Malaysia bythe respective West Malaysia's manufacturers, it said in its memorandumpresented at the Ministry of International Trade and Industry (MITI)annual dialogue session here Tuesday.

Currently, MOMG said that the lower export tax of East Malaysia's CPKO ofseven percent when compared with West Malaysia's 10 percent caused this tobe preferentially exported versus being shipped to CPKO deficientpeninsular oleochemical manufacturers.

MOMG has also proposed to MITI the elimination of the five percent importduty on Palm Stearin, which would provide better market liquidity to helpPalm Stearin to be a competitive raw material when compared to tallow.

MOMG said that it was concerned that with the new capacities comingon-stream in Malaysia and overseas, would be detrimental to the industryif foreign investors were to be encouraged to invest and set upoleochemical plants.

It said that there are proposals to attract China to invest in Sabah toset up oleochemicals plants as one if the alternatives to utilise theexcess of Palm Kernel Oil (PKO) in Sabah in the future.

Sabah has the largest palm oil area in Malaysia accounting for about 30percent of the total hectarage and the palm oil production in Sabah isestimated to increase to six million tonnes in the year 2010.

"We propose that Sabah, with a fast growing palm oil industry, should playa complementary role as a raw material supplier to the oleochemicalindustry in Peninsular Malaysia to ensure sufficient supply of PKO," saidMOMG. -- BERNAMA