Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on January 10, 2018

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV), the world’s largest producer of crude palm oil (CPO), is anticipating a 30% to 50% rise in export volume, following the Malaysian government’s decision to suspend CPO export tax for the first three months of this year.

The tax suspension, the group said in a statement yesterday, is expected to benefit plantation companies with significant upstream operations and strengthen commodity prices for the first quarter of this year.

FGV group president and chief executive officer Datuk Zakaria Arshad said the move is timely and will be effective in reducing CPO stock levels that coincide with increasing demand from China for the upcoming Chinese New Year.

“With this development, we expect a 30% to 50% 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 said.

He said industry players have been facing issues of high CPO stock levels and the strengthening of the ringgit, which have pressured CPO prices to hover around RM2,500 per tonne.

With the export tax suspension in place, FGV expects average CPO prices for the first quarter of 2018 to improve slightly by trading around RM2,650 per tonne to RM2,750 per tonne.

Last Friday, Reuters, quoting Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong, reported Malaysia would suspend export taxes on CPO for a three-month period from Monday, to boost palm oil prices and reduce high stockpiles.

The last time Malaysia suspended CPO export taxes was from September to October in 2014.

However, the export tax suspension will be lifted before the three-month period, if CPO stocks fall to 1.6 million tonnes, Mah said.

The government had earlier set the CPO export tax at 5.5% for this month.

Meanwhile, in commenting the overall 2017 performance, Zakaria said FGV’s core business operations had performed well, with positive growth in fresh fruit bunch (FFB) production, compared with 2016.

“As for 2018, we remain committed in delivering the Strategic Plan 2020 through better core business performance, [a] stronger financial position, enhanced governance in all sectors and high performance culture that will deliver sustainable value to our shareholders,” Zakaria added.

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