India sets sight on Malaysia again for its palm oil needs

WHEN it comes to palm oil-based cooking oil, the heavily populated
Indian sub-continent comprising of India, Pakistan, Bangladesh and Sri
Lanka can be best described as the world's biggest user of the
commodity.
India, for example, imports almost half of its annual
edible oils requirement of which palm oil accounts for over 80% mostly
from Malaysia and Indonesia.
India also used to dominate about
65% of Malaysia's total exports of palm oil products. However, since
the late 90s, India had opted to purchase the more attractively priced
palm oil from Indonesia.
Of the total seven million tonnes of
palm oil imported by India last year, only 1.8 million tonnes are from
Malaysia while the bulk is from Indonesia.
Interestingly, the
situation is set to change this year thanks to the changes in
Indonesia's export duty structure, say industry experts.
The
impact is also reflected by the latest trade figures from the Malaysian
Palm Oil Board which showed that local palm oil imports into India in
the first quarter 2012 had almost doubled to 576,645 tonnes from
286,214 tonnes in the first quarter 2011.
Indonesia's move to
reduce its export duty in its effort to nurture its domestic palm oil
refineries by keeping most of the feedstock locally had made it
difficult for edible oil refineries in India to obtain consistent
supply of palm oil feedstock.
To a certain extent, this has resulted in the closing down of several small refineries in India.
India is now turning to Malaysia for the imports of its palm oil products.
Therefore,
it is indeed timely for Malaysia to take full advantage of the
situation in India to push for local palm oil consumption there.
In fact, the trade mission headed by Plantation Industries and Commodities minister Tan Sri Bernard Dompok
to India last week should be applauded as it has created greater
awareness on Malaysian palm oil and opens up more opportunities in
terms of partnerships and strategic alliances to expand the edible oil
and palm oil downstream businesses between the two countries.
Unknown
to many, Indian companies such as Tata, Birla and Allana Groups had
pioneered the establishment of palm oil refineries in Malaysia back in
the 70s and 80s,
Industry experts pointed out that Malaysia, as
an established palm oil exporter, could offer better trade facilities
to India especially in terms of logistics and financing benefits.
To facilitate financing, the Export-Import Bank of Malaysia Bhd (Exim Bank) last week signed a collaborative deal with Indian banks, ICICI Bank Ltd and YES Bank, to further enhance Malaysia-India trade especially for palm oil.
Exim
Bank will provide credit lines to ICICI Bank, which is India's largest
private sector bank and YES Bank, to facilitate the imports of
manufactured goods and commodities from Malaysia.
Palm oil is
envisaged to be among the leading sector that would benefit from the
scheme in view of the importance of the Indian market to the Malaysian
palm oil sector.
India, meanwhile, can also look into the
prospects of exporting rice and wheat, which are “staple” commodities
in Malaysia and are always in high demand.
Deputy
news editor Hanim Adnan is glad to see that Malaysia has finally taken
positive steps to counter Indonesia's low export duty regime and now
awaits for more positive announcements especially on the possible
reforms in loc