17/5/07 (Daily Express) - Kuala Lumpur: A new tax to help palm oil refiners cope with cost will hurt the least efficient plantation company, analysts said, and topping the list is Tradewinds Plantations Bhd.

The tax, called the Supply and Cooking Oil Price Stabilisation cess, will start in June and run for up to 12 months.

The Government decided to do this to help refiners cope with high crude palm oil (CPO) prices.

The scheme will hit companies that extract the least oil from their oil palm fruits, Kenanga Investment Bank said in a recent report.

"For the same amount of CPO produced, more fresh fruit bunches (FFB) has to be produced and therefore, more cess has to be paid," Yin Shao Yang, an analyst with Kenanga Investment said.

Tradewinds would be the most hit, he said.

"All Tradewinds estates are in Malaysia and it has relatively low oil extraction rate," he said.

The Malaysian Palm Oil Board will collect cess of RM2 per tonne of fresh fruit bunches (FFB) for every RM100 per tonne rise in the CPO price - as long as it stays above RM1,500 a tonne. This is only applicable to planers with moer than 40ha of land.

In an interview with Business Times recently, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said, "If the CPO price were to go up, the planters will pay more and if it comes down, they will pay less."

The Minister also said that this stop gap measure for the upstream big players to compensate the refiners will only last for 12 months, at the most.

Since the cess is not levied on the Indonesian estates owned by Malaysian plantation companies, Yin noted that earnings of Indonesian centric planters like Kuala Lumpur Kepong (43 per cent of total plantation area) and PPB Oil Palms (78 per cent of total plantation area) will be least affected.