Teresa Kok welcomes France’s delay in removing palm oil tax breaks

Minister of Primary Industries Teresa Kok (2nd from left) says it gives Malaysia time to prepare for the eventual removal.

KUALA LUMPUR: The move by France to delay the removal of palm oil’s tax incentives to 2026 is good news for palm oil-producing nations like Malaysia, Primary Industries Minister Teresa Kok said.

“It allows more room to prepare ourselves for the removal of the incentives on the biofuel and the future,” she said.

News agency Reuters had cited a parliament document saying France’s National Assembly adopted an amendment postponing the removal of palm oil’s tax advantages to 2026.

The move aims to provide an adequate transition period for French companies to prepare to move away from using palm oil as a biofuel.

The legislation was due to remove palm oil from a list of permitted biofuels in January.

The report stated that the move could benefit French oil company Total, which has invested €300 million (RM1.37 billion) to convert its La Mede site from a crude oil refinery into a biofuel plant, starting output in July.

The company uses palm oil as part of the feed-stock to produce biofuel, it said.

Although this postponement is temporary, Malaysia views the move positively, Malaysian Palm Oil Council (MPOC) chief executive officer Kalyana Sundram said.

“We look at it positively. (Had the amendment not been adopted) by January there would have been no palm oil allowed in the French biofuel system,” he said, adding the move is also the outcome of bilateral negotiations by the government, particularly the Ministry of Primary Industries.

Last month, secretary-general Tan Yew Chong led the ministry, Malaysian Palm Oil Board and MPOC delegation for a bilateral meeting in Paris where Malaysia’s sustainability initiatives and efforts, especially in the palm oil industry were highlighted.

“It was a fruitful discussion and it has contributed to the decision (by France),” he said.

Tan said the ministry would continuously engage with France with regards to the issue of palm oil.

Yesterday Malaysia struck key palm oil partnership deals with two major supply chain managers in the United Arab Emirates and China.

The agreements are expected to facilitate greater palm oil penetration in China, India and the Indian sub-continent.

The deals were sealed through the Bohai Commodity Exchange (BOCE) Malaysia/Asean platform, which inked two memoranda of understanding with Dubai-based Hakan Agro DMCC and China’s BOCE Global here today.

Speaking to reporters after the agreement signing ceremony, Kok said Hakan Agro, with its extensive business exposure in the Indian sub-continent, the Middle East and the UAE, would facilitate exports of more than one million metric tonnes of Malaysian palm oil in its core markets in the Indian sub-continent in 2020.

BOCE Global, meanwhile, aims to import about 1.5 million metric tonnes into China by 2020, she said.

“They aim to target primarily the inner regions of China, which are less exposed to palm oil (and) yet offer a significant growth potential due to the large population in the inner regions, which are also registering significant economic growth,” Kok added.