07/06/2010 (Bloomberg) - Pakistan, the world’s third-biggest importer of palm oil, may double its purchases of crude product after the government reduced an import duty in its federal budget announcement on June 5.

“As crude imports double because of the duty reduction, the import of refined palm oil and refined oilseed will fall by the same amount because of an increase in sales tax,” Ikram Chaudhry, secretary of the Pakistan Edible Oil Refiners Association, said in a telephone interview from Islamabad today.

Pakistan reduced the import duty on crude palm oil to 8,000 rupees ($105.20) a ton, from 9,000 rupees with immediate effect. It also increased the rate of sales tax levied on the import of all commercial goods by one percentage point to 17 percent from July 1.

Palm oil for August-delivery dropped as much as 1.5 percent to 2,437 ringgit ($731) a metric ton on the Malaysia Derivatives Exchange, erasing gains from last week, when investors speculated that higher Malaysian exports last month may have cut stockpiles. The contract was at 2,450 ringgit at the 12:30 p.m. trading break in Kuala Lumpur.

Pakistan imported 1.3 million tons of crude and refined palm oil in the nine months ended April 30, three percent less than the same period a year ago, according to the Federal Bureau of Statistics.

The nation imports palm oil from Malaysia and Indonesia while oilseed is bought from Canada, Australia and Europe, according to the association. Ten Pakistani refiners process 1,200 tons of vegetable crude oil a day.