16/10/2012 (Bernama) - The export of Malaysian palm oil is expected to register a shortfall this year from the record RM80.4 billion in 2011.

Minister of Plantation Industries and Commodities Tan Sri Bernard Dompok said while there would be a shortfall, it also depends on how the market reacts for the next two months of this year.

"A forecast is of no significance to me at the moment. It depends more on the market reaction after this," he told reporters after launching the Palm Oil Trade Fair and Seminar 2012, here today.

For the first nine-months of this year, Malaysian palm oil exports stood at RM54 billion.

It is understood that the declining palm oil prices, contributed mainly by the revised tax regime in Indonesia, will be the major factor for lower exports, in terms of value this year.

Indonesia, as the world's biggest palm oil producer, has since October 2011, drastically widened the gap between the crude palm oil (CPO) and refined export taxes, to encourage more downstream investments and production of refined palm products.

As a result, CPO and crude palm kernel oil are cheaper for downstream producers there. Like Malaysia, refined products shipped out from Indonesian shores are also tax-free.

On the announced CPO tax rate reduction in Malaysia, Dompok said the new structure is only effective next year, as the government wants to give an ample adjustment period for Malaysian refiners.

"It's a transition period for the industry and refiners. That's why we want to take some time and implement the structure next year," he added.

Following the decline in palm oil prices since September this year and an increase in domestic palm oil stocks to 2.48 million tonnes last month, the ministry had announced that effective Jan 31, 2013, the CPO export tax rate will be between 4.5 per cent and 8.5 per cent.

This would depend on the prevailing CPO price, and to be fixed on a monthly basis for Malaysia to stay competitive.

Earlier in his speech, Dompok said the government believes there are opportunities for the private sector to redefine the business approaches in the oil palm industry, by forming partnerships and strategic alliances, and at the same time to discover new avenues for expanding the edible oil and palm oil business.

"There are opportunities to explore investments in downstream higher value-added palm derivatives, such as oleochemical, pharmaceutical, processed foods, specialty products and even consumer brands," he added.