17/09/2012 (The Sun Daily) - The government's policy to give out approved permits (AP) to certain palm oil exporters, exempting them from paying the 23% tax, has been put into question.

Many of the beneficiaries are now multi-billion dollar corporations since the introduction of the AP in 2000, alleged PKR trade and investment bureau chairman Wong Chen.

"We need to ask now whether they still need the tax exemption. It is imperative to make good policy decisions that help the country," he said at a press conference recently.

Wong said the APs were put in place to support local companies equipped with facilities to export tax-free crude palm oil (CPO) overseas, as compared to those without APs who are required to pay 23% tax.

Wong also claimed there were strong indications of abuse in the system as the AP list is allegedly a state secret.

"During a recent palm oil forum held in Kuala Lumpur, a palm oil analyst asked for the list of AP holders to be named, but the panel said the list came under the Official Secrets Act.

"This is highly suspicious and even more so in the midst of the industry crisis where Malaysian refineries are now working at 60% capacity," Wong said.

He claimed that the local palm oil industry has also been facing a crisis stemming from Indonesia's new tax incentives, resulting in Indonesian refineries taking over a sizeable market share of processed palm oil from Malaysian refineries.

Wong pointed out that the government's solution to the crisis – increasing the tax-free CPO quota by 2 million metric tonnes to 5.6 million metric tonnes – meant a potential loss of RM4 billion in duty revenue for 2012.

"By increasing the quota, the government has effectively bypassed the local refineries to support overseas refineries by allowing more CPO to exit the country," he stressed.

With proper governance, the palm oil industry could see RM2 billion of duty revenue realised annually, he said, adding PKR will bring up the matter during the next parliamentary sitting.