The world biggest importer of palm oil hikes the import taxes for palm oil to protect the country’s local rapeseed crop
By FARA AISYAH / Pic By AFIF ABD HALIM
Malaysia will appeal India’s protectionist decision to hike the import tax on crude and refined palm oil, making Malaysia’s key commodity export more expensive in the world’s second-most populous nation.
Last week, New Delhi said in a statement that the import tax on crude palm oil (CPO) had been increased to 44% from 30%, while the tax on refined palm oil to 54% from 40% — the highest level in more than a decade.
India, the world biggest importer of palm oil, had hiked the import taxes for palm oil to protect the country’s local rapeseed crop. The south-central Asia nation with a 1.32 billion population is already the world’s largest importer of edible oil and a key market for Malaysia’s palm oil.
Plantation Industries and Commodities (MPIC) Minister Datuk Seri Mah Siew Keong said there is a trend of increasing duties in most countries, which is measured as a protection policy.
“We will write to our Indian counterparts to ask them to consider this.
“India raising tax on palm oil has actually been an ongoing thing. It fluctuates according to the season,” Mah told reporters at the Palm and Lauric Oils Price Outlook Conference & Exhibition 2018 (POC2018) in Kuala Lumpur yesterday.
Mah added that the decision to lift the export duty on CPO from January to March — to encourage product exports as local palm oil inventories climbed 16% in November from October, to 2.6 million tonnes on higher production and lower exports — was also due to the trend of increasing duty in most importing countries.
Mah has just returned from the Malaysia-European Union (EU) Oil Palm Negotiation Mission to address the EU’s ban on Malaysia’s palm oil.
To date, Malaysia has received support from leading EU countries including Spain, France, Sweden, the UK and the Netherlands over its stand in opposing any discriminatory measures against palm oil.
In response to the anti-palm oil campaign, Mah also said MPIC has undertaken concerted efforts through various platforms including the Palm Oil War Room (POWR), led by MPIC secretary general Datuk K Yogeesvaran.
POWR monitors and takes immediate and appropriate actions with the cooperation of related ministries including the Foreign Affairs Ministry, International Trade and Industry Ministry, Natural Resources and Environment Ministry, as well as the private sector and smallholder associations.
Meanwhile, Bursa Malaysia Bhd introduced new enhancements to further strengthen the CPO futures contract (FCPO) effective Feb 26 in conjunction with the opening of POC2018.
The enhancements include increase in position limits for the FCPO market to allow traders to increase their exposures without the need to seek additional exemptions, revision of trading hours to give traders an additional 30 minutes for trading and hedging activities, and extension of trading tenure to give traders more flexibility to hedge their palm oil exposure.
It also includes traceability document requirements which require sellers to provide traceability documents in order to facilitate the easier tracking of the origins of CPO up to the palm oil mill.
Mah also encourages companies to consider managing their palm oil price risk by hedging using FCPO.
As the most liquid futures contract for the pricing of CPO, FCPO becomes the global benchmark for not only palm oil, but also other edible oils.
Mah added that FCPO recorded trading activities of almost 300 million metric tonnes last year, lending credence to the depth of its liquidity.