3/21/05 - Indonesian Agriculture Minister Anton Aproyantoma has said hiscountry will focus on quality and competitive pricing of crude palm oil inorder to compete with Malaysia. The minister said that Indonesia plans totap bio-diesel as a fuel for domestic transport. He also said that Indiashould lower the carotenoid value of palmolein.

Indonesia accounts for 30% of the global production of crude palm oil,while Malaysia is the largest producer with a 50% share.

"Our prices are competitive, but we are struggling to maintain the qualityof crude palm oil vis-a-vis that of Malaysia. We plan to invest somecapital towards this initiative," Aproyantono told.

He, however, refused to divulge details of investment plans.

The minister was here to attend the two-day G-20 ministerial meeting,which concluded Saturday.

BIO-DIESEL

Indonesia is also planning to set up a bio-diesel plant. "We have testedthe viability of bio-diesel as a domestic transportation fuel by blendingpalm oil with regular diesel. We will soon be calling for investors inthis field," the minister said.

Indonesia has a small pilot plant producing about 500 tonnes of bio-diesela year. Technologically, Indonesia is happy with the results, the ministersaid.

As year-on-year palm oil output is on the rise, bio-diesel productionappears to be a good option, he said.

INDIAN IMPORT DUTY

The Indonesian minister also raised the issue of higher Indian import dutyon palm oils with Finance Minister P. Chidambaram and Commerce andIndustry Minister Kamal Nath.

"I had approached both ministers for the cut in import duty. The 15percentage-point increase in palm oil import duty last month isunnecessarily escalating prices," he said.

"However, Chidambaram made me understand that high duties are essential tokeep the Indian market safeguarded against the price fluctuationsglobally," Aproyantoma said.

India may not review the duty for some time, he added.

Currently, crude palm oil attracts an import duty of 80% in India.

INDIA'S CAROTENOID SPECIFICATIONS

"As India may not review import duty for some time, we have recommended atleast lowering of carotenoid value of palmolein. It should either be atthe same level of CPO or lower," Aproyantono said.

Last month, the Indian government relaxed the qualitative norms for CPOimports by reducing the minimum carotenoid value to 250 parts per millionfrom 500 ppm. It however, left the carotenoid value of palmolein unchangedat 500 ppm.

"Processing of CPO leads to palmolein. Thus, the carotenoid value ofpalmolein also needs to be relaxed," he added.

Carotenoid is a colour pigment present in palm oil and its value reduceswith time and during transportation on high seas.

India, the largest consumer in the world, buys most of its crude palm oilrequirements from Indonesia, while the refined palm oil comes largely fromMalaysia. India imports around 3.5 million tonnes of palm oils annually.

Global production of palm oil in the year to September is estimated at31.28 million tonnes, up 7.4% on year.