08/02/2013 (Bernama) - Malaysia has 2.6 million tonnes of crude palm oil (CPO) in its inventory and the government is looking at different ways to reducing it, said Golden Palm Growers Bhd Executive Chairman, Andrew Phang.

"Part of the problem in the past has been the CPO tax structure that we had and the government aim's today is to try to reduce the existing inventory, because as long as there is huge stockpile, prices will continue to be dampened.

"Before the revision in the CPO export tax structure we had been very uncompetitive compared to our Indonesian counterparts," he told Bernama at the Golden Palm Growers Bhd estate tour here, yesterday.

He said changing the tax structure by fixing the export tax at zero for the past couple of months at least, has put Malaysia back in a competitive position.

"That is good as it means we can compete based on efficiency, productivity and market forces, rather than artificial support of a tax structure.

"The reduction in tax structure in fact made the Indonesians raise their tax to nine per cent, whereas we are maintaining it at zero.

"In that sense, we should be more competitive, and naturally other parties would buy our CPO and help reduce the stockpile," Phang added.

He said everybody is focusing on the tax structure but it is not so straight forward.

"One of the many ways to reduce the CPO tax is to make it more competitive, and Malaysia is also looking at increasing the usage of CPO in the biodiesel programme.

"Malaysia has a B-5 blend programme, which means for every litre of diesel, five per cent needs to contain biodiesel and the raw product for biodiesel is in CPO.

"The government is talking about increasing B-5 to B-10 and just by that, you will use up roughly of another 300,000 tonnes of CPO.

"The industry as a whole is a long term industry and with continued government support and efficiency, I think we will be competitive and be around for a long time, as an FFB producer, mill or refinery," he added.

Golden Palm Growers Bhd is a public company with 4,550 hectares of palm oil estates and is a producer of fresh fruit bunches.