(This article was originally published Monday)


  KUALA LUMPUR (Dow Jones)--Malaysia may raise the threshold limit above which
crude palm oil prices will attract a windfall tax, a government official said
Monday.

  "Request of the palm oil industry is under consideration. The final decision
in this regard will be taken by the finance ministry," said the official.

  The finance ministry plans to Tuesday table a supplementary budget in
parliament.

  "A decision, if taken, could be announced as part of the budget," said the
official.

  The windfall tax is 15% for oil palm plantations in peninsular Malaysia and
7.5% for those in Sabah and Sarawak states.

  Currently, the CPO windfall tax is imposed on the amount of price exceeding
MYR2,000 a metric ton. At the time the tax was introduced, on July 1, 2008, CPO
was around MYR3,500/ton, and are now hovering close to MYR1,900/ton.

  The oil palm industry has sought for increasing the threshold to
MYR2,500/ton, to ensure higher earnings if prices move between
MYR2,000-MYR2,500.

  Since the average CPO price was MYR1,842 in January and MYR1,898 in February,
there was no windfall tax charged.

  The revenue collected from the tax is used to finance domestic subsidies. The
tax replaced an existing charge on oil palm plantations.

  Based on a price of MYR3,500/ton, the government had set a target in July
last year to mop up around MYR2.3 billion in 12 months, of which around MYR1.9
billion was to be used to subsidize local sales of cooking oil.

  The official said the burden of subsidizing cooking oil has also reduced due
to the fall in CPO prices since August last year.

  Prior to July 1, the government levied a cooking oil stabilization charge on
oil palm plantations, imposed on the portion exceeding MYR1,500/ton. The
revenue collected from this charge was more than the amount required to meet
the domestic cooking oil subsidies.