The Star Online (10/01/2020) - KUALA LUMPUR: India’s restrictions on imports of refined palm oil will lead to a loss of market share for Malaysia and spark a price war with rival supplier, Indonesia, a Malaysian industry association said.

India, the world’s biggest edible oil buyer, issued a notification on Wednesday amending imports of refined palm oil to “restricted”, a move that industry sources said amounted to an effective ban.

The move was seen as punishing Malaysia, India’s main supplier of refined palm oil, for criticism of its policies by Prime Minister Tun Dr Mahathir Mohamad. Indonesia is the world’s biggest exporter of crude palm oil (CPO).

The Palm Oil Refiners Association of Malaysia (Poram) said yesterday the move meant Malaysia would now have to compete on CPO sales to India, where Indonesia has traditionally been more cost competitive.

“This puts Indonesia and Malaysia at loggerheads. There will be a price war between Indonesia and Malaysia, and we are at the losing end, ” said Poram chairman Jamil Haron.

“We can still sell CPO, but now we need to compete with Indonesia.”

Haron said the restrictions on refined palm oil could be in the form of quotas and more regulations.

Malaysia last year overtook Indonesia as India’s biggest palm oil supplier after it won a lower duty for refined palm oil imports.

The South-East Asian neighbours account for 85% of the global palm oil production. Palm oil is Malaysia’s biggest agricultural export, accounting for 2.8% of its gross domestic product and 4.5% of total exports.

A Kuala Lumpur-based trader, who did not want to be named citing company policy, said Malaysia’s exports would start falling from end-January after current contracts end.

Malaysia exported an estimated 3.9 million tonnes of palm oil to India in 2019. — Reuters