Palm | Kelapa Sawit

PUTRAJAYA, Malaysia Feb 28 (Reuters) - The change in palm oil export tax in the world's largest supplier, Indonesia, may hurt plans for 25 new refineries in Malaysia where processors are already suffering from weak margins, a Malaysian government minister told Reuters on Tuesday.

Indonesia last year cut export taxes on refined grades that helped its domestic processors restart their factories and offer discounts to overseas buyers.

That turned margins negative for refiners in Malaysia, the No.2 palm oil producer, and the government is looking at ways to keep investments flowing into its $20 billion sector, Commodities Minister Bernard Dompok said.

"There is that certainty of losing investors. Of course, we are very concerned about these planned investments," Dompok said in an interview ahead of the Bursa Malaysia Palm Oil Conference next week.

He said the government was looking to give the refineries "assistance in some form". Some of the proposals on the table included helping existing and new refiners with grants to promote the production of higher value palm oil products used in infant formula, ice cream and vitamin E supplements, Dompok said at his office in Malaysia's administrative capital of Putrajaya.

Malaysia has 51 refineries with a combined yearly capacity of 22.9 million tonnes. It plans new capacity of 9.6 million tonnes.

The 25 new refineries are in various planning and construction phases in Malaysia's Borneo island states of Sabah and Sarawak, Dompok said.

One key investor has already shifted some of its focus to Indonesia.