India’s refined oil tax hike to stir CPO demand, says MPOC

The increased duty on refined palm oil would be applicable for 6 months until March 2, 2020

by SHAHEERA AZNAM SHAH/ pic by MUHD AMIN NAHARUL

THE raised import duty of Malaysian refined palm oil to India is expected to intensify the demand for crude palm oil (CPO) from the country.

Malaysian Palm Oil Council (MPOC) CEO Datuk Dr Kalyana Sundram said Indian refiners would see an opportunity to bulk up in their CPO inventory.

“We are still selling both CPO and refined palm oil, but because of the tax differentiation, we expect the Indian refiners to be taking up more CPO,” he said.

“We still have the opportunity because CPO from Malaysia is being sold at duty-free and it will continue to be imported by the Indian market.

“So far, we are still seeing the purchases by Indian importers as there is the forward trade of up to 60 days for palm oil purchases. It will be a slow kick in, it won’t be immediate,” Dr Sundram told reporters at the Love My Palm Oil Campaign launch for Mydin Mohamed Holdings Bhd in Selangor yesterday.

However, he said the increased import duty will reduce the market share of Malaysian refined palm oil in the Indian market.

“India has imported a substantial quantity of Malaysian refined palm oil in the past few months because of the lowered duty. It was estimated that the increase was about up to 727% over the months.

“With the higher import duty, we anticipate that it will take away the market share of refined palm oil from Malaysia.

“We also feel that the palm oil from other countries will have a more level playing field in the coming months,” he said.

Yesterday, the Indian government said it will raise the customs duty on refined palm oil from Malaysia from 45% to 50% to curb the exorbitant amount of refined palm oil imports to the country in order to boost its local refining activities.

The increased duty on refined palm oil would be applicable for six months until March 2, 2020.

Currently, India, which is Malaysia’s largest palm oil imports market, imposes a 40% import tax on CPO and 50% on refined palm oil.

However, under an agreement with India — Malaysia has the advantage of a reduced 45% tax on refined palm oil from January — which has helped increase the refined palm oil imports by India since the beginning of the year.

According to the Malaysia Palm Oil Board data, the refined palm oil exports to India surged 727% in the first half of 2019 to 1.57 million compared to the same period in the previous year, due to the duty advantage.

Primary Industries Minister Teresa Kok, who was present at the event, lauded supermarket chain Mydin’s action in removing all anti-palm oil products from the shelves of its grocery store while hoping that other retailers in the country would follow suit.

Previously, Kok said the Domestic Trade and Consumer Affairs Ministry is currently reviewing the proposal to ban products with anti-palm oil labels from local retail stores.

She said an act to restrict anti-palm oil products would complement Indonesia’s move of removing local and imported food items with “palm oil-free” or “no palm oil” labels off its shelves at grocery stores since last month.