Do away with crude palm oil APs, urges PKR

PKR has called on the government to review and possibly do away with the approved permit (AP) system that allows tax exemption for the export of crude palm oil (CPO) as this can be prone to abuse.

As a result of this abuse, PKR investment and trade bureau chief Wong Chen (left) said, the government's move to increase APs for CPO exports in its bid to stem falling prices has proven ineffective.

"At the heart of the issue is that a lot of these APs were given to companies that have no ability to sell CPO. The policy to push two million metric tonnes more of CPO to the already sluggish market resulted in little to no new buyers," Wong said in a press statement yesterday.

Crude palm oil production has steadily increased this year but exports have fallen, causing the local supply chain to be clogged and prices to fall.

The AP for CPO export was introduced in 2000 to allow Malaysian companies that have refineries overseas to export crude palm oil to those facilities without incurring the 23 percent export duty.

Wong reiterated that the system lacked transparency as the AP recipients were kept secret.

'APs given to dodgy companies'

In a separate press statement, also issued yesterday, PKR deputy secretary-general Darrell Leiking named a company that he said was a recipient of such APs.

This, Leiking said, was based on six companies that publicly declared in the Directory of Malaysian Exporters of Palm Products 2010 that they were exporting CPO.

Zooming in on one of the companies, Leiking said that despite the APs being intended for companies to only export CPO for processing by their refineries abroad, this particular company had no overseas refinery.

"Has the company met with the prerequisite conditions, such as having an oil palm refinery overseas, before receiving this privileged CPO AP?" he asked.

He also pointed out that this company was partly owned by an Indonesian firm.

"How do we justify that such an AP for duty-free CPO export is given to a foreign co-owned company at the expense of Malaysian taxpayers?"

Leiking estimated that based on the company's revenue in 2009, it would have been exempted from paying approximately RM20 million in export tax.