(19-08-2004) - Malaysia may exempt shipments of crude palm oil (CPO) tooffshore refineries operated by local firms from export tax, CommoditiesMinister Datuk Peter Chin said on August 19.

Malaysia, the world's largest palm oil producer, imposes an export tax onCPO to ensure supplies for local refiners. The tax starts at 10% on pricesabove RM650 a tonne.

"If it is for the use of Malaysian facilities, and they can show there isa need to help the industry overall, why not? I will consider," Chin said,when asked if the government planned to allow duty-free exports of CPOthis year.

"You have companies that are quite bullish about this idea and they arewilling to invest into facilities. I'm willing to consider provided wewill not harm the local refining industry," he told Reuters in aninterview.

Chin said he had not decided how much CPO the government might allow forduty-free export.

"I wouldn't want to put out an arbitrary figure unless there are enoughrequests," he said. "What's the point of me approving 2 million tonnes ifin the end the demand is not there."

Malaysia allowed 1.3 million tonnes of CPO -- or 10% of its annualproduction -- to be exported without tax last year to help reduce localstocks. Malaysia's palm oil exports are mostly in refined products such asRBD palm oil and palm olein.

Palm oil refinery companies owned by Malaysian plantations have expandedinto the Netherlands in recent years in pursuit of a slice of Europe'shuge oils market, based in Rotterdam.

Golden Hope bought Unilever's 150,000 tonne capacity plant in Rotterdam in2001 while the Kuok Group recently announced plans to build a refinerytwice as large there.

IOI Corp Bhd, which bought Netherlands' Loders Croklaan group in 2002, isbuilding a 1 million tonne refinery which will be Europe's largest.Industry officials said Rotterdam's total CPO refining capacity will reach2 million tonnes when the plant is completed in 2006.

Malaysian groups such as Kwantas and Kumpulan Guthrie have also acquiredpalm oil plantations in Indonesia to expand their planted acreages. -Reuters