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France moves to delay end of tax break on palm oil biofuel

The move by France to delay until 2026 the end of palm oil’s tax advantages instead of next year is good news for palm oil-producing countries like Malaysia, Primary Industries Minister Teresa Kok said.

“It allows more room for us as a palm oil-producing country to prepare for the removal of the incentives on the biofuel and more room to prepare for the future,” she told Bernama in Kuala Lumpur today.

Reuters cited a Parliament document as saying that France’s National Assembly adopted an amendment delaying until 2026 the end of palm oil’s tax advantages, which aims to provide sufficient transition period for French companies to prepare for the end of palm oil in biofuels.

The legislation was due to remove palm oil from a list of permitted biofuels from January 2020.

The report stated that the move could benefit French oil company Total, which has invested 300 million euros (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 is preliminary, Malaysia looks at the move positively, Malaysian Palm Oil Council (MPOC) chief executive officer Kalyana Sundram said.

“We look at it positively. Otherwise, by January there could be no palm oil allowed in French biofuel system,” he said, adding that France’s move is also the outcome of bilateral negotiations undertaken by the Malaysian government, in particular, the Primary Industries Ministry.

Last month, the ministry secretary-general Tan Yew Chong led the ministry, Malaysian Palm Oil Board (MPOB) 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 very fruitful discussion and I believe it contributed to the decision (taken by France),” he said.

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

It has been a good week for palm oil news as yesterday, Malaysia struck key palm oil partnership deals with two major supply chain managers in the United Arab Emirates and China 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 MoUs with Dubai-based Hakan Agro DMCC and China's BOCE Global in Kuala Lumpur.

Speaking to reporters after the MoUs signing ceremony, Kok said Hakan Agro, with 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 their core markets in the Indian sub-continent in 2020.

BOCE Global, meanwhile, aims to import about 1.5 million metric tonnes into China by next year, 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 and also registering significant economic growth,” Kok added.

- Bernama

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