26 February 2002 (Business Times) - MALAYSIA wants China to stop using “protective trade mechanisms” with regard to the import of crude palm oil(CPO) and honour its World Trade Organisation (WTO) obligations.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said even thoughChina is to import 2.4 million tonnes of CPO in 2002 under a WTO ruling,it may not commit itself to buying such an amount.“Malaysia is urging China to stick to its WTO obligations and allow a freeflow of CPO in the spirit of free trade,” he told reporters in Bangiyesterday.“China can announce the quota but it may not necessarily stick to it, “said Dr Lim who earlier opened a seminar on carbon finance for the palmoil sector.China, Malaysia’s third biggest CPO buyer last year with 1.292 milliontonnes, had in previous years allocated its CPO import quotas to itsstate-owned importers twice a year.China usually announces the first tranche in March followed by the secondtranche in July.Last year, India was Malaysia's biggest palm oil buyer, taking in 2.031million tonnes, followed by the European Union, which bought 1.601 milliontonnes.In 2000, China’s CPO import quota was set at 1.5 million tonnes, of whichit bought 800,135 tonnes. Last year, the republic set a quota of 1.4million tonnes.

The quota has been raised to 2.4 million tonnes since Beijing’sfull-fledged entry into the WTO last December 12.China’s CPO import quota for 2003 is 2.6 million tonnes, 2004, also 2.6million tonnes and 2005, 2.88 million tonnes.Traders had widely expected the republic to announce its 2002 quota in thefirst week of January or the latest before the Lunar New Year two weeksago.But to date, no formal announcement on the quota has been made by theState Development and Planning Commission.But Dr Lim said the quota is now open to all since February 8 and resultsof the successful importers who are allowed to import plus theirrespective quotas will be known by March 4.Dr Lim said out of the 2.4 million tonnes, 1.4 million tonnes go to theprivate sector with about 10 companies selected.Another 800,000 tonnes are allocated to state-owned importers while200,000 tonnes are for counter-trade purposes.“The state-owned importers can choose not to import Malaysia’s CPO,arguing that no foreign exchange (forex) allocation has been madeavailable to them by the Chinese Government,” said Dr Lim.“I find this hard to believe because we know China is not short of forexand has more than US$150 billion (US$1 = RM3.80) in foreign reserves.”Dr Lim said Malaysia will further address the issue by having discussionswith its rival CPO exporter, Indonesia.“I will be having discussions with Indonesian Trade and Industry MinisterRini M.S. Sowandi at a rubber meeting in Bangkok, Thailand, on Thursdaybefore we bring this matter up jointly with China.

“Malaysia and Indonesia easily account for almost 100 per cent of theworld’s CPO output, exporting 13 million tonnes last year.“The two countries could have easily supplied up to 8 million tonnes tothe world’s top two buyers of CPO, India and China, if not for the varioustariffs and protective measure imposed by the two buyers,” he said.Dr Lim said Malaysia’s CPO exports to China could well have surpassed the2.4-million-tonne mark if not for the quota allocations imposed by therepublic over the years.1990 and 1.3 million tonnes in 1993.“It could well be over 2.3 million tonnes by now because China’s instantnoodles industry alone consumes up to 1 million tonnes."Plus the republic’s CPO consumption has been on a rising trend over theyears in which its population of 1.3 billion people can easily consume 1.4million tonnes of CPO yearly,” said Dr Lim.Malaysia is the world's largest CPO producer, exporting 9,081,495 tonnesworth RM12.47 billion in 2000 compared with a record high of RM21.3billion in 1998.Last year, Malaysia produced 11.803 million tonnes of which it exported10.593 million tonnes.

In 1986, China imported 800,000 tonnes and it reached 1 million tones in