22/02/2012 (Business Recorder) - Pakistan's imports of palm oil from top producer Indonesia will more than quadruple to 800,000 tonnes over the next three years, an executive at an Indonesian industry group said on Tuesday.

Indonesia and Pakistan signed a preferential trade agreement in early February, which will result in Islamabad lowering its duty on crude palm oil.

"We expect exports to Pakistan in 2012 to recover," Fadhil Hasan, executive director at the Indonesian Palm Oil Association (GAPKI), told Reuters.

"The highest level we had was in 2007 at 800,000 tonnes," he added. "Hopefully in three years, we can make up that level."

Pakistan imported 178,000 tonnes of Indonesian CPO last year, he said.

Currently, India and China buy the most CPO from Indonesia, with Europe in third place.

Indonesia, which overtook Malaysia as the No. 1 palm oil producer in 2007, has a palm export tax system that aims to boost downstream industries, secure domestic supplies and reduce volatility in cooking oil prices.

Last year, Southeast Asia's biggest economy changed the structure of its palm export taxes, raising the tax for crude palm oil shipments and cutting refined product (olein) taxes in an attempt to boost its downstream industries.

"It is only benefiting the downstream industry and the government," said Hasan, who is lobbying for a 15 percent cap on the CPO export tax from 22.5 percent presently. "The upstream and farmers are the losers -- it's not fair."