UPDATE 1-Malaysia govt to discuss palm oil export tax on Friday
JAKARTA Oct 8 (Reuters) - Malaysia will consider possible changes to its crude palm oil export tax regime on Friday, including limiting plantation expansion to support falling prices, a minister said on Monday.
Late last week, Malaysia, the world's second biggest producer of the edible oil after Indonesia, delayed taking a decision on a proposal to cut crude palm oil export taxes to 8-10 percent from 23 percent as the cabinet needed more time to study the plan.
"The Malaysian cabinet will discuss the changes on palm oil export tax structure next Friday," said Bernard Dompok, Malaysia's plantation industries and commodities minister, following talks with Indonesia's agriculture minister in Jakarta.
Palm oil markets have been waiting for Malaysia to come up with a strategy to counter top producer Indonesia's move last year to cut export taxes of refined palm oil and boost margins for its downstream processing industry.
Malaysia and Indonesia account for about 90 percent of global palm oil supplies, of around 40 million tonnes.
Analysts say any move to cut Malaysia's export tax could help support crude palm oil prices.
Benchmark Malaysian palm oil futures closed down 2 percent on Monday as traders braced for rising inventory levels, offsetting bargain-hunting seen earlier in the market after steep declines last week to a near three-year low.
A debt crisis in the euro zone and economic slowdown in China - both top palm buyers - has muddied the demand outlook to weigh on prices.
In order to help prevent further declines in palm oil prices, both countries have agreed to work together to manage supplies and work closely on environmental issues.
"There are two possibilities in our cooperation with Indonesia," Dompok said. "First, reducing palm oil plantation expansion. The other possibility is to increase palm oil use (and) consumption in Malaysia by promoting biodiesel usage."
Replanting of palm trees that are more than 25 years old in Malaysia, was one way of doing this, Dompok added.
Indonesia's Agriculture Minister Suswono added however, that there were no plans for both countries to work together on joint palm oil export tax proposals. (Reporting by Yayat Supriatna; Writing by Michael Taylor; Editing by William Hardy)
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