Malaysia keeps crude palm oil export duty at 10% for April

[MALAYSIA] Malaysia, the world's second-largest palm oil exporter, has confirmed that it will maintain its export tax on crude palm oil (CPO) at 10% for April 2025. This decision, announced through a circular on the Malaysian Palm Oil Board (MPOB) website on March 19, 2025, comes as the country seeks to manage the impact of fluctuating global palm oil prices while balancing the needs of domestic producers and international buyers.

The move to maintain the 10% export tax comes as the reference price for CPO has been adjusted. For April, the reference price is set at 4,547.79 ringgit per metric ton, up from 4,390.37 ringgit per ton in March. This price increase has triggered the maximum export tax rate of 10%, which is applicable when CPO prices exceed 4,050 ringgit per ton. According to the Malaysian Palm Oil Board’s calculations, this structure starts with a 3% duty when prices range from 2,250 to 2,400 ringgit per ton, gradually increasing as prices rise.

Palm Oil Export Tax Structure

The export tax for crude palm oil in Malaysia operates within a progressive structure. As outlined by the MPOB, the tax rate begins at a minimal 3% when the reference price is between 2,250 and 2,400 ringgit per metric ton. However, once the price surpasses 4,050 ringgit per ton, the export duty is capped at 10%, the highest possible rate. This system aims to provide stability to both producers and international markets while ensuring that Malaysia remains competitive in the global palm oil trade.

The reference price calculation for CPO is a vital component in determining the duty structure. "The reference price of 4,547.79 ringgit per ton for April represents a noticeable increase compared to March's figure of 4,390.37 ringgit per ton," said a statement from the Malaysian Palm Oil Board. This increase in reference price directly impacts the export tax, which is designed to protect the interests of local palm oil producers while still being competitive globally.

Impact on the Palm Oil Industry

The decision to maintain the export tax at 10% is expected to have both positive and negative implications for Malaysia’s palm oil industry. On the one hand, the higher tax rate will provide additional revenue for the government, which can be allocated to various initiatives aimed at supporting the palm oil sector, including sustainability efforts and industry development. On the other hand, higher export duties could reduce the competitiveness of Malaysian palm oil in global markets, especially if other palm oil-producing nations, such as Indonesia, adopt more favorable policies.

Malaysia’s palm oil industry is facing increasing pressure to maintain its global market share amidst a rising trend of competition from other oil-producing nations. The decision to keep the export tax at 10% also reflects the government's commitment to balancing the economic interests of its domestic palm oil producers while keeping prices stable for global consumers.

Future Outlook for Palm Oil Exports

Looking ahead, industry analysts are monitoring global palm oil prices closely, as they have been subject to significant fluctuations in recent years due to factors such as weather conditions, supply chain disruptions, and changes in international demand. The Malaysian government’s ability to manage export duties will be crucial in ensuring the country’s palm oil sector remains resilient.

Industry expert Tan Yih Khor noted, "Maintaining a stable export tax rate helps mitigate the risks posed by price volatility in the international markets. It provides a level of certainty for producers, especially smallholder farmers, who rely heavily on consistent prices for their livelihoods." Tan’s comments emphasize the importance of consistency in policy as a way to maintain market stability, which benefits both local producers and consumers globally.

Moreover, with environmental concerns becoming more prominent in global trade discussions, Malaysia's palm oil industry has been under scrutiny regarding sustainability practices. The government has been actively promoting certified sustainable palm oil (CSPO) production, which aligns with international sustainability standards. In this context, the revenue from export duties could potentially fund initiatives that promote more sustainable practices within the palm oil sector, contributing to the broader goal of reducing environmental impacts.

Malaysia’s decision to keep the April crude palm oil export duty at 10% reflects the country’s ongoing efforts to stabilize the palm oil market while balancing economic interests and international trade obligations. The increase in the reference price to 4,547.79 ringgit per ton has led to the activation of the maximum export tax rate, highlighting the dynamic nature of the global palm oil market.

As Malaysia moves forward, it will need to carefully manage the complexities of export duties, price fluctuations, and sustainability efforts to maintain its position as a global leader in palm oil production. The government’s strategic decision-making will be crucial in shaping the future trajectory of the palm oil industry, ensuring it continues to thrive while meeting the challenges of a rapidly changing global marketplace.