KUALA LUMPUR (Jan 9): Felda Global Ventures Holdings Bhd (FGV) expects a 30%-50% increase in its export volume to major importing countries like India, Pakistan, China and Europe, following the government’s decision to suspend the crude palm oil (CPO) export tax for the first three months of the year, as it is expected to benefit plantation companies with significant upstream operations and strengthen commodity prices for the first quarter of this year.

In a statement today, FGV group president and chief executive officer Datuk Zakaria Arshad said the move is timely and will be effective to reduce CPO stock levels that coincide with increasing demand from China for the upcoming Chinese New Year.

"With this development, we expect a 30-50% 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," Zakaria said. 

He said industry players were faced with issues of high CPO stock levels and the strengthening of the ringgit, which have pressured CPO prices to hover around RM2,500 per MT.

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 MT to RM2,750 per MT.

On Friday (Jan 5), 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 starting yesterday (Jan 8), to boost palm oil prices and reduce high stockpiles.

The last time Malaysia suspended CPO export taxes was in September to October 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 January 2018.

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

“As for 2018, we remain committed in delivering the Strategic Plan 2020 (SP20) through better core business performance, stronger financial position, enhanced governance in all sectors and high performance culture that will deliver sustainable value to our shareholders,” Zakaria added.