MSIA TO DISCUSS TAX CUT FOR PALM OIL EXPORTS WITH INDONESIA

KUALA LUMPUR, Oct 6 (Bernama) -- Malaysia has expressed an interest in having discussions with Indonesia next week over the market rival's move for a reduced tax structure for palm oil exports.

"The market has been distorted. I am planning to hold discussions with my Indonesian counterpart on this matter and am awaiting a date," said Plantation Industries and Commodities Minister, Bernard Dompok.

He was speaking to reporters after launching the B5 biodiesel for the central region, Kuala Lumpur, here on Thursday.

Indonesia, announced in August that it was cutting the export tax for crude palm oil (CPO) to 22.5 per cent from 25 per cent previously, and on refined palm oil products (olein) to 13 per cent from 25 per cent effective Oct 1.

Dompok said the government was at present studying the impact of
Indonesia's palm oil tax cut move.

"We have been studying it and the Cabinet has been briefed on the
repercussions to the industry," he added.

He said Malaysia is poised to achieve this year's palm oil exports target of RM70 billion compared to the RM62.8 billion in 2010, despite having to bear the brunt of the tax cut. (US$1=RM3.17)

The market is concerned over talk of Malaysia's palm oil exports suffering after the downward revision in the export tax structure by Indonesia, which is also likely to intensify existing competition.

As a result, Malaysia may have to slash prices, to compete.

Malaysia is the world's second largest producer of edible oil and does not tax refined exports but CPO.

Malaysia and Indonesia account for 80 per cent of the global supply of palm oil.

-- BERNAMA