Oil Palm Industry Economic Journal Vol. 14 (1) September 2014 p. 27-38

Impacts of the New CPO Export Tax Structure on the Malaysian Refining Industry

Khomeini Ab Rahman Ayatollah*; Ramli Abdullah; N Balu; Norihan Husin; Nik Abdullah Nik Idris; Siti Mashani Ahmad and Norfadilah Hashim
Received:    Accepted:    Available Online:


The performance of the Malaysian palm oil refining industry had been greatly affected since Indonesia revised her palm oil export tax structure in 2012, which made her palm products more competitive in the world market. To improve the performance of the Malaysian refining industry, the government also revised its long-standing crude palm oil (CPO) export tax (operative since the 1970s) and implemented a new export tax structure, effective 1 January 2013. This is a proactive approach by the Malaysian government to increase competitiveness. As a result, the performance of the industry has been much better after the implementation, with exports of oil palm products increasing, stocks of palm oil declining, the price of CPO showing an upward trend and volatility reduced, refinery capacity utilisation rate increasing, purchases of CPO by refineries rising, processing of CPO growing, and production of finished products also expanding. Average capacity utilisation recorded a higher rate at 56.9%, or an increase by 10% after implementation of the new export tax structure as compared with the rate in 2012. The total volume of CPO purchased by refineries also increased to 12.62 million tonnes in 2013 from 11.49 million tonnes in 2012. Meanwhile, the total volume of CPO processed by refineries in 2013 had increased to 15.89 million tonnes compared with 14.07 million tonnes in 2012, or an increase of 12.9%. Production of finished products also recorded positive performance at 0.30 million tonnes in 2013 compared with 0.29 million tonnes in 2012. A survey carried out on refineries showed that the majority of them (71%) felt that the government should continue with the new CPO export tax structure.

Keywords: new CPO export tax structure, competitiveness, capacity utilisation rate

About Post Author


* Malaysian Palm Oil Board,
6 Persiaran Institusi, Bandar Baru Bangi,
43000 Kajang, Selangor, Malaysia.

E-mail: ayat@mpob.gov.my