25 Feb, 2003 (Business Times) - MALAYSIA aims to export more crude palmoil (CPO) rather than refined palm oil to India to compete with fastemerging rival Indonesia.

Primary Industries Secretary General Datuk Dr Abdullah Mohd Tahir saidMalaysia used to be a major CPO exporter to India before Indonesia slowlygrew as a major competitor.

“Now, the Indian CPO market is equally divided between the two countries.We need to push more CPO exports to secure a bigger market,” Abdullah toldreporters in Selangor yesterday.

Abdullah had earlier attended a seminar on Good Agricultural Practice andFood Safety in Palm Oil Industry launched by Primary Industries DeputyMinister Datuk Anifah Aman.

Malaysia exported a total of 1.8 million tonnes of palm oil to India lastyear which comprised CPO and processed palm oil. India is the world’sbiggest buyer of edible oils and is expected to buy up to five milliontonnes of palm oil this year.

Malaysia is the world’s largest producer of palm oil accounting for morethan 50 per cent producing 11.9 million tonnes last year while Indonesiasecures about 30 per cent producing about nine million tonnes.

“Furthermore, there is a difference in the duties imposed by India onimported CPO and refined palm oil at 65 per cent and 85 per centrespectively.

“With the cheaper duty on CPO, it will be an incentive for Malaysia’srefiners to set up joint ventures in India and buy more CPO,” saidAbdullah.

On another note, Abdullah said Malaysia is not pushing India for a tariffreduction in CPO’s 65 per cent duty to be at par with soyabean oil’s 45per cent anymore. He said studies done by the Government in the last fewyears have shown that the differential in duty does not affect Malaysiavery much.

India currently imposes a 65 per cent duty on CPO and a 45 per cent dutyon crude soyabean oil. Processed palm oil carries a duty of 85 per centwhile processed soya is about 50 per cent.

“India has a demand of between 12 and 13 million tonnes of edible oils ayear, of which its domestic supply can only produce seven million tonnes.

“So, there is a gap of five million there and the question now is can wecompete with Indonesia to supply that five million tonnes?

Abdullah said what Malaysia can do now is to work together with India onhow to fill that gap at a competitive price rather than seek tariffparity.

“It is better to work with India at other fronts rather than criticise inthe open on tariff parity,” said Abdullah.

Primary Industries Minister Datuk Seri Dr Lim Keng Yaik is in New Delhicurrently to seek a reduction in CPO tariff but was quoted as saying byReuters last Friday that Malaysia will not pursue the matter anymore.

However, the Press Trust of India reported yesterday that India may cutthe import duty on CPO by 10 per cent, quoting a senior governmentofficial.

Meanwhile, Anifah said agriculture had been blamed for many of theenvironmental ills facing the world and the palm oil industry had not beenspared.

“Issues ranged from destruction of the rainforest, forest fires due toland clearance for plantation purposes and environmental degradation suchas pollution and loss of soil fertility.”