RTRS--INTERVIEW-Investors in Malaysia may shift palm refining ops to Indonesia
Posted by Labels: Trader's highlightKUALA LUMPUR, Feb 29 (Reuters) - Foreign investors in Malaysia may shift some existing palm oil refining operations to top producer Indonesia to tap higher margins after Jakarta lowered its processed edible oil export taxes, said a top Malaysian industry official.
That may put Malaysia's over $20 billion industry in jeopardy as foreign investors and smaller palm oil refiners process 60 percent of the country's output, said Palm Oil Refiners Association of Malaysia (PORAM) Chief Executive Mohammad Jaaffar Ahmad.
"Malaysia cannot afford to lose the investment already made by these non-integrated refineries," Mohammad told Reuters in an interview on Wednesday ahead of the Bursa Malaysia Palm Oil Conference next week.
"The consequence could be catastrophic especially for the smallholders and private millers which are depending on them now to off-load their fresh fruit bunches and crude palm oil."
Mohammad did not give a value for the investments at stake but firms like U.S. agribusiness Cargill [CARG.UL] and Japan's Nisshin Olio <2602.T> operate refineries in Malaysia where the margins have come under severe pressure in recent months.
This is due to Indonesians offering discounts on processed palm oil to markets in India and Pakistan as they enjoy a price advantage of $100 per tonne because of lower export taxes, Mohammad said.
That may put Malaysia's over $20 billion industry in jeopardy as foreign investors and smaller palm oil refiners process 60 percent of the country's output, said Palm Oil Refiners Association of Malaysia (PORAM) Chief Executive Mohammad Jaaffar Ahmad.
"Malaysia cannot afford to lose the investment already made by these non-integrated refineries," Mohammad told Reuters in an interview on Wednesday ahead of the Bursa Malaysia Palm Oil Conference next week.
"The consequence could be catastrophic especially for the smallholders and private millers which are depending on them now to off-load their fresh fruit bunches and crude palm oil."
Mohammad did not give a value for the investments at stake but firms like U.S. agribusiness Cargill [CARG.UL] and Japan's Nisshin Olio <2602.T> operate refineries in Malaysia where the margins have come under severe pressure in recent months.
This is due to Indonesians offering discounts on processed palm oil to markets in India and Pakistan as they enjoy a price advantage of $100 per tonne because of lower export taxes, Mohammad said.
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