KUALA LUMPUR (Nov 5): SD Guthrie Bhd (KL:SDG) has called on the government to consider temporarily waiving the crude palm oil (CPO) export duty as a measure to resolve the ongoing supply glut.
The plantation giant’s president and group chief executive officer Mohd Haris Mohd Arshad urged the government to consider the policy to give the industry time to clear out its inventory.
“We urge the government to consider this, not indefinitely, but just give us (the industry) a few months so that we can push this (supply) out,” Haris said.
“Hopefully the government will come back with a favourable response,” he added.
High export duty makes it more expensive to buy Malaysian CPO compared with Indonesia, making it less competitive. The gap is between RM700 and RM900 per tonne, The Edge reported, citing industry estimates.
Malaysia imposes a tiered export duty of between 3% and 10% on CPO when prices exceed RM2,250 per tonne. The maximum rate of 10% applies when prices surpass RM4,050 per tonne.
The Malaysian Palm Oil Board spot CPO price stood at RM4,292 per tonne on Nov 4.
Haris explained that oil palm fruits are not like other sources of vegetable oil, such as soybean.
“Palm fruits are not like soybean, which you can store for a year; the moment you harvest your fruit today, you’ve got to send it to the mill for it to be processed,” said the CEO of the company, which operates 68 mills and produces over two million tonnes of CPO per year.
Calls for the export duty waiver come as Malaysia experiences a supply glut of CPO following recent months of strong production and logistics issues hamstringing the industry’s ability to export it.
A proposal for the waiver is expected to be discussed at the Cabinet meeting this Friday (Nov 6).
At press time, shares of SD Guthrie were up eight sen or 1.35% at RM6.01, valuing the group at RM41.56 billion.
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