Malaysia to review windfall tax on palm oil

Faced with a huge fall in crude pal oil (CPO) prices, Malaysia is all set to review cooking oil subsidies and the windfall tax being levied on CPO. According to officials, Malaysia will have to look at it based on the fact that windfall tax collection is getting smaller, and they have to see whether to revise cooking oil subsidies. A windfall tax is imposed on that portion of the CPO price that is above 2,000 ringgit ($588) a metric tonne. At the time of imposing the tax, on July 1, CPO prices were around MYR3,500/tonne but are now hovering close to MYR2,500/tonne. The revenue collected from the tax is used to finance domestic subsidies. The tax replaced an existing charge on oil palm plantations. Based on a price of MYR3,500/tonne, the government was expecting to mop up around MYR2.3 billion in 12 months, of which around MYR1.9 billion was to be used to subsidize local sales of cooking oil. However, Chin said the actual amount collected would now be lower than the initial target because of the fall in CPO prices. Malaysia’s palm oil exports rose 6.6% on month in August to 1.49 million metric tonnes. This is one of the biggest-ever monthly export of palm oil from Malaysia and the highest so far in 2008. Shipments were above market expectations of a 2%-5% rise. Malaysia exported 1.39 million tonnes palm oil in July. Exports have shown a sharp rise from July after falling for two successive months. According to SGS, Malaysia exported 1.11 million tonnes of palm oil in June, 1.26 million tonnes in May and 1.31 million tonnes in April. _NDTV