Tuesday September 16, 2003 - LOCAL exporters of processed palm oil will befurther encouraged to increase their exports with the proposed abolishmentof export duty on crude and refined, bleached and deodorised (RBD) palmolein under Budget 2004.

Malaysian Palm Oil Association chief executive M.R. Chandran said theproposal would help regularise the exports as well as provide moreopportunities, especially for RBD palm olein exporters, to boost exportsto major importing countries such as India and Pakistan.

This move augured well as India, a major traditional market, had recentlyreduced import duties on processed palm oil, he said.

To further capitalise on exports, Malaysian exporters can come to somemarketing strategy or alliance with Indian palm oil refiners to create awin-win situation that will benefit both parties in the long term, saidChandran.

India is expected to purchase more processed palm oil than crude palm oilas the gap between import duties on CPO and RBD palm oil has narrowedsubstantially, from 22.4% to the current 5%.

Given the anticipation of higher processed palm oil exports to India, thiscould translate into potentially higher refining volume and profits toMalaysian local refiners,'' Chandran said.

Currently, crude and RBD palm olein attract a 5% export duty.

Malaysia primarily exports processed palm oil to India, while Indonesia isthe major exporter of CPO.

Last year, only 11% of Malaysian palm oil exports were in the form ofCPO.

Plantation analysts also believe that it makes more sense for Malaysia tosell processed palm oil rather than CPO because, on the average, anadditional profit of RM20-RM25 per tonne could be made.

On the proposed incentives and tax exemptions for oil palm biomassactivities, Chandran said: “It will be interesting to note that Malaysianplantation companies which have abundance of empty fruit bunches and palmtrunks (when they do replanting) can finally commercialise these normallydiscarded items.