Malaysia likely to set up palm oil refineries in India

REPORTS FROM THE MPOB INTERNATIONAL PALM OIL CONGRESS (PIPOC) 2005

Malaysia is considering is considering helping private palm oil players to set up refineries in India as tariff duty towards exports (to India) of crude palm oil is cheaper vis-à-vis refined oils.

The move is also aimed at tackling the country's fast depleting market share in the Indian palm oil market.

"Malaysian palm oils now merely constitute 40 per cent of the total exports to India," said Y B Datuk Peter Chin Fah Kui, the Malaysian minister of plantation industries and commodities on the sidelines of the MPOB International Palm Oil Congress (PIPOC).

"We have been unable to do much about it. The Indian market has a tariff differential in favour of soyoils, thereby, making palm oils exports less profitable." Globally, while palm oils are cheaper vis-à-vis soyoil, India's duty tariff differential in favour of the latter makes imports (of the latter) cheaper and thereby holds a pivotal position in governing edible oil prices.

"Further, we are also losing our market share to Indonesia largely owing to their fast rising production and lower rates," he said..

Indonesia is soon likely to surpass Malaysia to become the world's number one producer of palm oil. While industry analysts (at the GLOBOIL2005 in Mumbai) were expecting that to happen over 5-6 years, the Malaysian minister feels it likely to be in less than five years.

"They have more land and they are fast increasing the plantation areas so they will soon surpass us in production," the minister said.

Putting a figure of 800,000 hectares to the Malaysian' privately-owned plantations in Indonesia (out of the total 4 million hectares), the minister said, "This figure is likely to go nowhere but up." Malaysia intends to become a market leader in value-added high quality palm oil products.

"That will be the focus area for us."

Industry experts feel that under this focus area, India is likely to be a major export market for Malaysia following the former's preference to crude products vis-à-vis the refined.

(The correspondent's trip was sponsored by Malaysian Palm Oil Promotion Council)