KUALA LUMPUR: The government’s decision to suspend the crude palm oil (CPO) export tax for three months is expected to benefit plantation companies with significant upstream operations, Felda Global Ventures Holdings Bhd said.
The move will also strengthen the commodity prices for the first quarter of this year, FGV Group president and chief executive officer Datuk Zakaria Arshad said.
Zakaria said industry players are faced with issues of high CPO stocks level and strengthening of the ringgit that had pressured the CPO price to around RM2,500 per tonne.
“The government’s action to implement the export tax suspension is timely and an effective way to reduce CPO stocks level that coincides with the increasing demand from China for the upcoming Chinese New Year.
“With this development, we expect a 30-50 per cent increase in the export volume to major importing countries like India, Pakistan, China and Europe. This shall also enable us to increase supply to our joint-venture refinery in Pakistan at a more competitive pricing,” he reiterated.
Zakaria said based on this situation, FGV expects average CPO prices for the first quarter 2018 to improve slightly by trading around RM2,650 per tonne to RM2,750 per tonne.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong announced recently the suspension of export taxes on CPO for three months from Jan 8 to April 7, in a bid to boost palm oil prices and reduce high stockpiles.
The taxes removal, however, will end early if CPO stocks fall to 1.6 million tonnes.
According to the Malaysian Palm Oil Board, the country’s CPO export tax for January 2018 was 5.5 per cent, while its stockpile in November 2017 stood at a two-year high of 2.56 million tonnes.
On its overall 2017 performance, Zakaria said FGV’s core business operations had performed well with positive growth on fresh fruit bunches production compared to 2016.
“As for 2018, we remain committed in delivering the Strategic Plan 2020 (SP20) through better core business performance, stronger financial position, enhance governance in all sectors and high performance culture that will deliver sustainable value to our shareholders,” he added.