Indonesia's Palm Oil Export Levy To Have Short-Term Negative Impact

KUALA LUMPUR, May 7 (Bernama) -- Indonesia's palm oil export levy will have a short-term negative impact on Malaysian plantation companies, but expected to boost the crude palm oil (CPO) price and plantation profits in the longer term, said Affin Hwang Investment Bank Bhd Thursday. In a research note Thursday, the investment bank said imposition of the export levy would affect Malaysian planters in Indonesia, and those which have yet to set up refining and oleochemical plants in the country. "We estimate that a full year impact may trim our net profit forecast for IJM Plantations Bhd and Genting Plantations Bhd by 5.7 per cent and 3.5 per cent respectively," it added. Affin Hwang also said the export levy might also lower its net profit forecast for Kuala Lumpur Kepong Bhd and Sime Darby Bhd, which has downstream capabilities, by 3.0 per cent and 2.3 per cent respectively. On Tuesday, Indonesian President Joko Widodo signed a regulation to impose a levy of US$50 per metric tonne on CPO exports and US$30 per metric tonne on processed palm oil exports, which is expected to take effect by the third week of May. Meanwhile, the threshold for the CPO export tax remains unchanged at US$750 per metric tonne. The regulation was announced in March this year to fund Indonesia's biodiesel subsidies. "We expect investors to closely monitor the progress in Indonesian CPO production after the levy is imposed. "Accelerated achievement of biodiesel mandates will be positive for the CPO price, which has also firmed lately, as the soybean oil premium widens and crude oil prices recover," said Affin Hwang. The investment bank maintained a neutral call on plantation stocks. As at 11.33 am, the plantation counter eased 0.3 of-a-point to 7,538.82. -- BERNAMA