Malaysia Keeps Palm Oil Export Tax Unchanged to Spur Shipments

Malaysia, the world’s second-largest producer, left the tax on exports of crude palm oil unchanged for an eighth month to encourage shipments and prevent a build-up in stockpiles during the peak output season.

Cargoes will be taxed at 4.5 percent in October after the reference price was set at 2,306.11 ringgit ($709) a metric ton, according to a Customs Department statement. The tariff was zero in January and February before rising to 4.5 percent in March.

Exports from Malaysia climbed for a third month in August as a weaker ringgit and a rally in soybeans, which can be crushed to yield an alternative, boosted demand from importers. Prices of the oil used in everything from candy to detergents will extend declines as supply from Indonesia and Malaysia increases and biodiesel demand peaks, according to Dorab Mistry, director at Godrej International Ltd.

“‘Malaysian crude palm oil is more competitive than Indonesia’s,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur. “Exports will be smooth because people are not holding back in anticipation of any changes.”

Malaysia said in October it would cut the tax to between 4.5 percent and 8.5 percent from about 23 percent to trim stockpiles and compete with Indonesia, the biggest producer. Indonesia cut its export tax on crude palm oil to 9 percent this month.

Production in Malaysia rose 3.6 percent to 1.74 million tons last month, according to the palm oil board. Trees are in a more productive cycle which will last at least until April, Mistry said Sept. 12. Shipments rose 14 percent to 732,412 tons in the first 15 days of September from 644,589 tons in the same period in August, Intertek said today.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at

To contact the editor responsible for this story: James Poole at

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