08/03/2012  (Hindu Business Line) - Palm oil industry will be one of the 12 core economic drivers in Malaysia under the Government Economic Transformation Program to transform the national economy into a higher come status by 2020; and palm oil as one of the national key economic areas focuses on improving the upstream and downstream sectors towards generating higher productivity and new sources of income, Mr Tan Sri Bernard Dompok, Malaysia Minister of Plantation Industries and Commodities, has said.

Inaugurating the Palm and Lauric Oils Price Outlook Conference here on Tuesday, the Minister remarked that production of oleo derivatives for applications in soaps, detergents and cosmetics as well as nutraceutical products will receive close attention. “The government will continue to emphasise the development of this industry on a sustainable basis and concurrently ensuring there is balance between its developmental perspective and the need to preserve the environment. Later, at a press conference, to a specific question from Business Line about how Malaysia proposes to respond to Indonesia's palm oil export tariff revisions, the Minster said that while Indonesia is going through the process of industrialisation, any tax on export will have a bearing on growers. “In Malaysia, we are examining how to help the industry without hurting the growers”, he said.

Queried further whether Malaysian and Indonesian governments were in talks to evolve a common tariff policy, Mr Dompok said, “We are cooperating and talking to our counterparts”. It is well known that Malaysia is keen to export value added palm oil products including refined oil and discourage export of crude oil. No wonder, a duty-free export quota for crude palm oil has been fixed. However, local refiners are up in arms against the duty-free export quota because the aggregate refining capacity is far ahead of domestic raw material availability; and any export of crude palm oil results in lower capacity utilisation to that extent. Refiners have demanded that duty-free export of crude oil be stopped.

Suggesting that crude palm oil export from Malaysia was about 3 million tonnes, the Minister said he wants to keep Malaysian prices same as overseas prices. This remark, of course, raises the possibility of Malaysia making suitable changes in its tariff structure to respond to the Indonesian move.