MARKET DEVELOPMENT
14-02-2002
Malaysia disappointed China didn’t announce palm o
Thursday, February 14, 2002 (The Star) - MALAYSIA is disappointed thatChina failed to honour its promise to announce its import quota for palmoil by last month.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said China hadcommitted to purchase 2.4 million tonnes of palm oil from theinternational market, compared with 1.4 million tonnes last year,following its entry into the World Trade Organisation (WTO).Malaysia provides about 70% of China’s palm oil requirements.However, he said, the market had waited “week after week†since thebeginning of January for China to announce its import quota, but it wasnot forthcoming.“This has had a dampening effect on the palm oil market. (The Chinese)have to give the quota but they did not, and this is causing worries inthe market,’’ he said.He also said, as this was the Chinese New Year holiday in China, Februarymay pass before the Chinese Government decides on the quota.Lim also said although China was now a member of the WTO, it still did notpractice the free market system.It was imposing restrictions, including controlling the import of palm oilwith the quota.“If they do announce the quota, I hope it is not with conditions,’’ hetold reporters at Parti Gerakan’s Chinese New Year open house at the party’s headquarters in Kuala Lumpur on Tuesday.Apart from the import quota, he said, another barrier to palm oilexporters was getting China to provide foreign exchange for its importers,who were mostly state enterprises.“They may give the quota to the state enterprises but if they do notprovide foreign exchange – China has US$145bil in foreign reserves – wewill have another barrier,’’ he said, adding that he may have to go on aworking visit to China soon to sort out the problem.Lim said International Trade and Industry Minister Datuk Seri Rafidah Azizwould write to China’s Minister of Foreign Economic Trade Relationshipwhile he (Lim) would write to China’s Minister of Economic PlanningCommission to ask the Chinese Government to announce the quota.He also said that apart from China, India (as the other top two consumersof palm oil) was also causing a dampening effect on the price of palm oilin the commodity exchange.The price of palm oil should be at RM1,250 per tonne by the end of thisyear but the current price was already down to RM1,050 per tonne, Limsaid.This, he said, was also due to India’s “discriminating import tariff.â€Although India had reduced import tariff on crude palm oil from 70% to65%, it was still discriminatory compared with the 45% tariff on soya oil,he said.The difference between import tariffs for processed palm oil and palmolein and soya oil was even greater – 98% (including value added tax) forthe former compared with 50% for the latter, Lim said.“I have written to the Indian government hoping for it to review the taxat the end of February when the government reveals its tax structure,’’Lim said.He also said the Indian government could continue to raise the tariff toprotect its farmers.However, Malaysia wanted India to narrow the difference in the tariffstructure between palm oil and soya oil.Palm oil and soya oil are the two main oils imported by India.“We also suggested some mechanism to put the tariff on palm oil and soyaoil at the same level,’’ Lim said.According to Lim, the unfair distribution, tariff imposition, andimplementation of the quota system by China and India had caused adisruption in the international palm oil market.
