08/08/2012 (The Malaysian Reserve) - Despite negotiations with Indonesian authorities on a common tax structure for palm oil exports, no common ground has been struck yet, said Minister of Plantation Industries and Commodities Tan Sri Bernard Dompok yesterday.

“So far, we have not been able to get anything concrete,” he told reporters after launching a month-long Merdeka celebration for his ministry, the National Audit Department and the National Immigration Department in Putrajaya yesterday.

The government recently announced that it will increase the duty free quota for crude palm oil exports by two million tonnes to 5.5 million tonnes, or almost 30% of total crude palm oil (CPO) production in Malaysia in a move to maintain export sources, it was reported.

However, palm oil refiners have cried foul of the move as it is felt that the move lowered the industry’s competitiveness and reduced national revenue.

The increased duty free quota is a temporary measure for stock management and also because of the changes when Indonesia started their present policy on their tax regime on oil palm exports, Dompok said yesterday.

“While the government is looking at all avenues, we have to be mindful that the palm oil industry has a lot of stakeholders,” he said, declining to answer on a time frame for the temporary measure.

There are growers who fall under the small- and largeholders category and also millers, he said. “The government is trying to find out what’s the best way to ensure that everyone comes out a winner,” he said.

On the common tax structure, Dompok said his ministry had covered those grounds with Indonesian ministers but so far nothing concrete has been achieved.

While the negotiations are ongoing, the government would have to determine an approach to the problem that will see all stakeholders getting a fair deal, Dompok said.

Palm Oil Refiners Association of Malaysia chief executive officer Mohammad Jaaffar Ahmad was recently reported to have said that the move will aggrieve the ailing refining industry, in terms of the availability of CPO and also the utilisation capacity rate to less than 60%, rendering the refining industry totally uncompetitive.

The increased quota would also mean a loss of billions of ringgit in uncollected tax, he said.