KUALA LUMPUR: Given the strong bilateral trade relationship between Malaysia and India, the Malaysian Palm Oil Association (MPOA) hopes the South Asian country would continue to source its palm oil from Malaysia, said chief executive Datuk Nageeb Wahab.
He said both countries are mutually reliant on each other, and should India decide to go ahead with the decision to curb its Malaysian palm oil imports, it would have an adverse effect on the country too.
The Indian government was recently reported saying that it would reduce its Malaysian palm oil imports and planned to substitute it with edible oils from countries like Indonesia, Argentina and Ukraine, in reaction to Malaysia’s comment on India’s action with regards to Jammu and Kashmir at the United Nation’s General Assembly last month.
According to a source, Malaysia’s exports to India were worth US$10.8 billion in the fiscal year ended March 31, while imports totalled US$6.4 billion.
The South Asian country has been Malaysia’s biggest palm oil buyer since 2014, and accounted for 28 per cent of the country’s total palm oil exports in the first nine months of 2019.
Meanwhile, thanks to the preferential import duty on Malaysian refined palm oil (for the first nine months of 2019), India’s market share rose significantly from 28.7 per cent to 57.8 per cent.
Malaysia imports products such as iron and steel, electrical and electronic equipment, cotton, coffee, tea and spices from india.
As such, Nageeb is optimistic that everything will be back to normal and Malaysia can continue to have good trade with India.
Last week, Minister of Primary Industries Teresa Kok said that the country is exploring the possibility of sourcing raw sugar from India starting next year to enhance its bilateral trade with India.
Additionally, Malaysia is also looking into importing more buffalo meat from India to meet the increasing local demand.
Asked about the Indian food ministry’s proposal to increase the integrated GST (IGST) on imported refined palm oil to 12 per cent from January next year, Nageeb said that could happen as the government was being pressured by the local refiners.
"The implementation of the IGST is possible.. right now people prefer to buy refined oil so their refiners do not have enough business and this will affect our market.
"At the end of the day, palm oil prices are dictated by supply and demand, so if this happens, of course prices will be impacted and the smallholders will be affected.
"But at the same time, palm oil has many uses, so we have always had alternatives, ” he added.
Nageeb noted that there have been some positive signs of palm oil prices moving up due to the lower stock level in the world’s two largest producers - Indonesia and Malaysia.
Less fertiliser used in plantation areas as well as the haze problem have resulted in low yields, while demands have continued to grow, he noted.
"So looking at the current scenario, I believe the price should stabilise at RM2,300 to RM2,500 per tonne next year, which is reasonable for the smallholders, ” he concluded.
MPOA is tasked with the important function of balancing the needs and interests of the various sectors for synergy and development of the plantation industry as a whole.
It also serves the interests of other plantation crops such as rubber, cocoa and tea as well as non-crop issues relating to land, labour, trade and pricing. - Bernama