February 12, 2015 / 6:30 AM / 4 years ago

UPDATE 1-Malaysia to resume taxing palm oil exports in March

* Malaysia scrapped duty for 5 mths to boost demand

* Govt will announce details on Feb. 16 (Adds minister comment, palm oil price)

By Yantoultra Ngui

KUALA LUMPUR, Feb 12 (Reuters) - Malaysia will resume taxing exports of crude palm oil in March, a minister said on Thursday, after scrapping the duty for five months in a bid to spur demand and reduce bloated stockpiles.

“After studying various scenarios ... the government has decided that the export tax regime will continue from March,” Malaysian plantation industries and commodities minister Douglas Uggah Embas told reporters.

Uggah said the tax rate would depend on palm oil prices, adding that the government would announce details on the tax policy on Feb. 16.

Malaysia, the world’s second-largest producer of crude palm oil (CPO) after Indonesia, exempted CPO exports from taxes from October to December, later extending the policy to the end of February.

Increased supply and slack global demand have pressured palm oil prices which dropped 15 percent last year.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange was little changed at 2,283 ringgit ($630) per tonne by the midday break on Thursday, well above a six-week low of 2,106 ringgit hit in January.

Malaysia usually calculates its crude palm oil tax with average monthly prices provided by the industry regulator, the Malaysian Palm Oil Board, where a monthly average above 2,250 ringgit will trigger tax rates that start from 4.5 percent. But the government makes the final decision.

Uggah said combined crude palm oil output from Malaysia and Indonesia is expected to rise to 51.1 million tonnes in 2015 from 49.2 million tonnes last year.

Uggah said the decline in palm oil prices was also due to higher production of competing vegetable oils, including soybean oil.

“It is important for the palm oil industry to assess this scenario and explore measures that would contribute towards strengthening CPO prices as well as increasing exports of Malaysian palm oil,” he said. ($1 = 3.6230 ringgit) (Writing by Manolo Serapio Jr.; Editing by Tom Hogue and Joseph Radford)

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