3/12/05 ( The Star)  -  THE liberalisation on palm oil imports into China, effective early next month, signals more palm oil, especially refined bleached and deodorised (RBD) palm stearin, to be imported at competitive prices.


Datuk Haron Siraj

Malaysian Palm Oil Promotion Council chief executive officer Datuk Haron Siraj said the prospects of exporting more palm oil to China were encouraging as the abolition of China's tariff rate quota (TRQ) signified the freedom of importing the commodity with restrictions on volume. 

Malaysia sold 2.5 million tonnes of palm oil to China – about 60% of China's total imports – last year, he said in his paper on Challenges and Prospects of China's World Trade Organisation (WTO) Post-Quota Arrangements on the Demand for Palm Oil at the half-day Palm Oil Refiners Association (Poram) Annual Forum in Subang Jaya yesterday.

In addition, the close proximity of Malaysia to China also means lower costs of transportation and timely delivery, compared with shipment of soybean oil from the US and South America and rapeseed oil from Europe.

“The close proximity has provided Malaysian exporters with US$5 to US$10 freight discounts against palm oil shipped from Sumatra by Indonesian exporters,” he added.

Asked whether the TRQ abolition will change the magnitude of crude palm oil (CPO) imports when refining facilities are available in China, Haron said: “The demand shift from refined palm oil to CPO is not expected to take place in the medium term as the current import duty does not discriminate against refined palm oil vis-a-vis CPO in terms of import duty.”



Dr James Fry

On the challenges post-TRQ, he said many were speculating that China might introduce new import requirements in an attempt to curb free flow of imports.

“China has committed non-restriction in terms of volume for palm oil import, but may request the importers to report or declare to the China National Vegetable Oil Association of the volume imported,” he added.

Another speaker, Britain-based LMC International Ltd managing director Dr James Fry, said the price of local CPO was expected to briefly trade above RM1,600 per tonne in April next year on anticipation of lower production and stocks, as well as slower world oilseeds output next year.

He said slower global demand caused by high fuel prices would also pull back the CPO prices to around RM1,500 per tonne.

Poram chairman Richard Cheang said the association was currently reviewing the freight on board bulk contract for palm oil due to trade developments and difficulties, which started in the second half of 2003.

“The draft of the revised contract is ready, but still subject to other issuing parties like the Malaysian Edible oil Manufacturers Association as well as legal vetting,” he said, adding that barring any major obstacles, this revised contract would be introduced in the first half of next year.