KUALA LUMPUR, 26 DEC,2001 (BUSINESS TIMES) - TRADERS and industry insidersare doubtful that China will import the 2.4 million tonnes of palm oil ithas pledged next year as the country’s purchase will largely be determinedby the price factor from now onwards.Although China’s entry into the World Trade Organisation (WTO) will allowa bigger intake of Malaysian crude palm oil (CPO) into the country,competition from other edible oils will also become more stiff andMalaysia should be mindful of this development, they said.“It will all depend on price competitiveness; whichever oil that iscompetitive for them, they will import it,” an industry insider toldBusiness Times.According to a news report last week, Malaysia expects China to announcein early January a quota for imports of CPO in 2002, following Beijing’sentry into the WTO on December 11 this year.Primary Industries Minister Datuk Seri Lim Keng Yaik was quoted as sayingthat under the WTO, China has committed to import at least 2.4 milliontonnes of palm oil next year but it could take more with encouragementfrom Malaysia and Indonesia, the world’s two largest producers.“I don’t think China will import more than that,” a CPO dealer said.“The 2.4 million tonnes import quota does not necessarily mean China willimport more palm oil. You have to remember that there is also a 2.5million tonnes import quota for soya oil,” he said.According to trade sources, as a result of trade liberalisation and theestimated increase in domestic consumption, China’s import of edible oilscould be in the range of more than four million tonnes by 2005.Palm oil is expected to account for about two million tonnes of the total,should the price difference between soyabean oil and palm oil remainsmall.Between January and November this year, China has bought 1.12 milliontonnes of palm oil from Malaysia, making it the second largest buyer afterIndia. The country bought 1.02 million tonnes of palm oil from Malaysialast year.Meanwhile, industry insiders were pessimistic that the Government’s oilpalm replantation scheme — which has recently been extended for anothersix months until June — will attract favourable response from growersfollowing the significant increase of CPO prices over the last few months.Under the scheme, which was launched early this year, the Governmentoffers oil palm growers RM1,000 cash for each hectare they cut down andreplant.The scheme was aimed at reducing the country’s CPO output, thus pushing upthe commodity’s prices which had been hovering around RM750 a tonne atthat time.However, CPO palm oil prices have since improved by nearly RM400 a tonneor 50 per cent, hence offsetting the incentives offered under the scheme.“It doesn’t make sense for them (oil palm growers) to replant their cropbecause they are now getting enough returns for whatever they areproducing,” a trader said.“Unless the Government starts forcing them to do so, not many of themwill,” he added.An industry observer said cutting down oil palm crop will only serve as a “quick fix” solution for the oversupply situation because once thereplanted trees are all grown up and mature, the same problem will onceagain reappear and repeat its vicious cycle.It has been reported that despite the economic crisis in 1997, Malaysiahad expanded its oil palm plantation area by 150,000ha to 200,000ha a yearand as a result, the country’s production figure is expected to continueto grow over the coming years.“We got into this problem because we expanded (the crop planting) veryfast,” he said.“If we can cut the trees today, in three to five years we will have thesame glut again... unless we are ready to absorb them (CPO) and notproduce more,” he said.Under the Government’s replantation scheme, the target was to cut down200,000ha of oil palm but so far, only 44,000ha have been cleared.The Government had forecast that land given over to oil palm would total3.5 million ha in 2002.