Posted: 10 Nov 2014 01:32 AM PST
KUALA LUMPUR: Malaysia's oleochemical exports are expected to climb 20 per cent to surpass RM11.2 billion this year, thanks to the manufacturers' efforts in upgrading their fatty acids and fatty alcohol throughput.
Malaysian Oleochemical Manufacturers Group president Tan Kean Hua said, since 2010, major oleochemical manufacturers have upgraded their fatty acids and fatty alcohol throughput to leverage on economies of scale.
"To date, our members are churning out 2.8 million tonnes," he said at the sidelines of Oils & Fats International Congress 2014, here, recently.
Following Turkey-based Evyap Sabun's RM500 million investment in a 400,000 tonne-a-year oleochemical plant in Johor, Malaysia now has 19 oleochemical companies. They produce basic oleochemicals such as fatty acids, fatty alcohols, esters and refined glycerine.
Specialty chemical manufacturers, higher up the value chain, process these basic oleochemicals further and formulate them into toothpaste, soap, dishwashing liquid, laundry detergent, industrial lubricants and even food emulsifiers.
Since January 2013, the restructuring of the crude palm oil (CPO) tax to match that of Indonesia has levelled the playing field with Indonesia and allowed Malaysia's palm oil exports to be more competitive.
"As long as the investing climate here is on equal footing with our neighbour, we're able to produce and ship out more from Malaysian shores," Tan said.
Malaysia has decided to lift the CPO tax for the four months between September and December, while the Indonesian government let the existing CPO tax structure run its course.
As palm oil prices is averaging below US$750 (RM2,512) a tonne, it is attracting zero duty in Indonesia.
"Since CPO price is currently trading below tax thresholds, the effect of lifting the CPO tax or letting it run its course is the same. Both Malaysia and Indonesia are not taxing CPO exports as long as they are trading below RM2,250 and US$750 a tonne, respectively," he said.
But what if the CPO price were to surpass the threshold levels of RM2,250 and US$750 per tonne?
Tan pursed his lips and tactfully replied, "as palm oil downstream investors, we urge the government to be very careful and mindful about maintaining a level playing field with that of Indonesia."
"All we ask for is for an equal chance to compete. Malaysia's tax gap between crude and refined palm oil must mirror that of Indonesia's. This is vital for the survival of Malaysia's billions of ringgit of palm oil downstream investments," he said.
According to the Malaysian Palm Oil Board, the country exported RM8.53 billion worth of oleochemicals in the first nine months of the year. "I think this year, we should be able to do 20 per cent more than last year's RM9.30 billion," he added.
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