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Impact of CPO export duties on Malaysian palm oil industry

In January 2013, Malaysia reduced the export duty structure to be in line with the Indonesia's duty structure. Both countries export crude and processed palm oil. Since Malaysia and Indonesia are close competitors and they compete in the same market, a change in export duty rate in one country...

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Main Authors: Abdulla, Ibragimov, Mohamed Arshad, Fatimah, Bala, Bilash Kanti, Mohd Noh, Kusairi, Muhammad Tasrif,
Format: Article
Language:English
Published: Science Publications 2014
Online Access:http://psasir.upm.edu.my/id/eprint/37942/1/ajassp.2014.1301.1309.pdf
http://psasir.upm.edu.my/id/eprint/37942/
http://thescipub.com/abstract/10.3844/ajassp.2014.1301.1309
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spelling my.upm.eprints.379422016-02-01T02:32:23Z http://psasir.upm.edu.my/id/eprint/37942/ Impact of CPO export duties on Malaysian palm oil industry Abdulla, Ibragimov Mohamed Arshad, Fatimah Bala, Bilash Kanti Mohd Noh, Kusairi Muhammad Tasrif, In January 2013, Malaysia reduced the export duty structure to be in line with the Indonesia's duty structure. Both countries export crude and processed palm oil. Since Malaysia and Indonesia are close competitors and they compete in the same market, a change in export duty rate in one country will affect the other. Indonesia, as the world's biggest palm oil producer, has drastically widened the values between the crude palm oil and refined palm oil export taxes since October 2011, to encourage more downstream investments and production of refined palm oil products. Under the revised export duty structure, crude palm oil and crude palm kernel oil are cheaper for downstream activities in Indonesia. The new structure is expected to reduce Malaysia's competitiveness in the world market as its export duty is relatively higher. A high export duty results in high price of crude palm oil which is the raw material for processed palm oil. The research questions are: (i) What are the likely future trends of crude palm oil exports under the new crude palm oil export duties? Will it increase, reduce or stabilize? (ii) What are the likely future trends of processed palm oil exports? Will it increase exponentially, stabilize or reduce? To answer these questions, a system dynamics model was developed for the Malaysian palm oil. Application of the system dynamics model provides a framework to understand the feedback structure and how changes in variables impact the behavior of the palm oil industry. This research suggests that with low crude palm oil export duties crude palm oil domestic price, profitability of plantation owners, immature crop, mature crop, total planted area, production and exports of crude palm oil increase, however exports of processed palm oil decrease. Science Publications 2014 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/37942/1/ajassp.2014.1301.1309.pdf Abdulla, Ibragimov and Mohamed Arshad, Fatimah and Bala, Bilash Kanti and Mohd Noh, Kusairi and Muhammad Tasrif, (2014) Impact of CPO export duties on Malaysian palm oil industry. American Journal of Applied Sciences, 11 (8). pp. 1301-1309. ISSN 1546-9239; ESSN: 1554-3641 http://thescipub.com/abstract/10.3844/ajassp.2014.1301.1309 10.3844/ajassp.2014.1301.1309
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description In January 2013, Malaysia reduced the export duty structure to be in line with the Indonesia's duty structure. Both countries export crude and processed palm oil. Since Malaysia and Indonesia are close competitors and they compete in the same market, a change in export duty rate in one country will affect the other. Indonesia, as the world's biggest palm oil producer, has drastically widened the values between the crude palm oil and refined palm oil export taxes since October 2011, to encourage more downstream investments and production of refined palm oil products. Under the revised export duty structure, crude palm oil and crude palm kernel oil are cheaper for downstream activities in Indonesia. The new structure is expected to reduce Malaysia's competitiveness in the world market as its export duty is relatively higher. A high export duty results in high price of crude palm oil which is the raw material for processed palm oil. The research questions are: (i) What are the likely future trends of crude palm oil exports under the new crude palm oil export duties? Will it increase, reduce or stabilize? (ii) What are the likely future trends of processed palm oil exports? Will it increase exponentially, stabilize or reduce? To answer these questions, a system dynamics model was developed for the Malaysian palm oil. Application of the system dynamics model provides a framework to understand the feedback structure and how changes in variables impact the behavior of the palm oil industry. This research suggests that with low crude palm oil export duties crude palm oil domestic price, profitability of plantation owners, immature crop, mature crop, total planted area, production and exports of crude palm oil increase, however exports of processed palm oil decrease.
format Article
author Abdulla, Ibragimov
Mohamed Arshad, Fatimah
Bala, Bilash Kanti
Mohd Noh, Kusairi
Muhammad Tasrif,
spellingShingle Abdulla, Ibragimov
Mohamed Arshad, Fatimah
Bala, Bilash Kanti
Mohd Noh, Kusairi
Muhammad Tasrif,
Impact of CPO export duties on Malaysian palm oil industry
author_facet Abdulla, Ibragimov
Mohamed Arshad, Fatimah
Bala, Bilash Kanti
Mohd Noh, Kusairi
Muhammad Tasrif,
author_sort Abdulla, Ibragimov
title Impact of CPO export duties on Malaysian palm oil industry
title_short Impact of CPO export duties on Malaysian palm oil industry
title_full Impact of CPO export duties on Malaysian palm oil industry
title_fullStr Impact of CPO export duties on Malaysian palm oil industry
title_full_unstemmed Impact of CPO export duties on Malaysian palm oil industry
title_sort impact of cpo export duties on malaysian palm oil industry
publisher Science Publications
publishDate 2014
url http://psasir.upm.edu.my/id/eprint/37942/1/ajassp.2014.1301.1309.pdf
http://psasir.upm.edu.my/id/eprint/37942/
http://thescipub.com/abstract/10.3844/ajassp.2014.1301.1309
_version_ 1643832104843214848
score 13.211869

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