KUALA LUMPUR, March 11 ― Malaysia should scrap export duty rates for processed palm kernel oil products to help its refining sector, which is losing market share to the world's biggest palm producer Indonesia, a Malaysian industry body said.

Malaysia's exports of refined, bleached, deodorised (RBD) palm kernel oil have fallen 26 per cent in the past four years, D. Chandramohan, chairman of the Palm Oil Refiners Association Of Malaysia (PORAM), told Reuters.

“Removing its 5 per cent export duty to zero duty would improve our export competitiveness,” he said. RBD palm kernel oil is the only Malaysian processed oil product that still attracts a duty.

Refiners in Malaysia, the world's second-largest palm oil producer, say Indonesian rivals enjoy a price advantage as the country imposes a higher export levy on crude palm oil (CPO) than on refined palm products. This encourages CPO producers to sell to domestic refiners, keeping down their costs.

PORAM called last year for a common crude palm oil export duty plan with Indonesia, to helpMalaysian refiners boost downstream margins and improve market share.

Malaysian shipments of palm oil products have fallen for five consecutive months since October, according to data from cargo surveyors.

Exports in February fell by 17-18 per cent from a month ago, as consumer demand for the tropical oil from top consumers China and India waned. Palm oil is also losing market share to soyoil on a narrowing spread between the two oils, and as China favours importing cheaper soybeans to crush for domestic use.

Palm oil refiners face a further hurdle if proposals to impose import taxes on palm oil and its related products are implemented in France and Russia.

France's proposals would see an import tax on palm oil and palm kernel oil of €300 (RM1,374) per tonne in 2017, rising to €900 per tonne by 2020. Russia's excise tax on palm oil could be introduced on July 1 and amount to around US$200 per tonne.

“If these two countries do it and we don't oppose it, other countries may follow suit. The basis for this is discriminatory,” said Chandramohan. ― Reuters