IMPACT OF CPO EXPORT DUTIES ON MALAYSIAN PALM OIL INDUSTRY

In January 2013, Malaysia reduced the export duty structure to be in line with the Indonesia's duty structure. Both countries export crude and processed palm oil. Since Malaysia and Indonesia are close competitors and they compete in the same market, a change in export duty rate in one country...

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Bibliographic Details
Published in:American journal of applied sciences 2014-08, Vol.11 (8), p.1301-1309
Main Authors: Abdulla, Ibragimov, Arshad, Fatimah Mohamed, Bala, B K, Noh, Kusairi Mohd, Tasrif, Muhammad
Format: Article
Language:English
Subjects:
Crude oil
Exports
Indonesia
International trade
Markets
Palm oil
Raw materials
Taxes
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Summary:In January 2013, Malaysia reduced the export duty structure to be in line with the Indonesia's duty structure. Both countries export crude and processed palm oil. Since Malaysia and Indonesia are close competitors and they compete in the same market, a change in export duty rate in one country will affect the other. Indonesia, as the world's biggest palm oil producer, has drastically widened the values between the crude palm oil and refined palm oil export taxes since October 2011, to encourage more downstream investments and production of refined palm oil products. Under the revised export duty structure, crude palm oil and crude palm kernel oil are cheaper for downstream activities in Indonesia. The new structure is expected to reduce Malaysia's competitiveness in the world market as its export duty is relatively higher. A high export duty results in high price of crude palm oil which is the raw material for processed palm oil.
ISSN:1546-9239
1554-3641
DOI:10.3844/ajassp.2014.1301.1309