Four large domestic edible oil manufacturers are in talks with the Malaysian government to invest in both downstream and upstream projects there.
"It would be unfair on my part to divulge details before final decisions are taken," said Peter Chin Fah Kui, the Malaysian minister of plantation industries & commodities, on the sidelines of the Malaysia-India Palm Oil Trade Fair & Seminar 2008 in Mumbai today.
"We have technology, raw material, skilled labour and you have money. Let's bring them together for mutual benefit," Kui added. Responding to a query on an earlier exit of the Aditya Birla Group from Malaysia, he said, "That could be the management's decision. But, no company in Malaysia has exited because of unfriendly government policies."
Malaysia is exploring possibilities of setting up joint ventures to enhance trade relationship with India. As Malaysian does not permit export of crude palm oil, India substituted Malaysia with Indonesia for import of this valuable commodity. India, too, is keen on protecting interest of its own downstream players, including refiners.
Therefore, the Malaysian export of refined palm oil to India has not picked up in the last few years. Palm oil exports to India has declined to 500,000 tonnes in 2007 from 2.3 million tonnes 10 years ago.
Meanwhile, Malaysia is facing an acute shortage of rice and planning to build buffer stock for food security. Kui is likely to make a "palm oil for rice" offer to Agriculture Minister Sharad Pawar in a scheduled meeting tomorrow.
"Malaysia won't mind if the Indian minister agrees to exporting rice and wheat, while we have palm oil to meet India's needs," Kui said.
India has banned export of non-basmati rice and levied an export duty of $200 per tonne on basmati exports early this year to make exports uncompetitive in the overseas markets. But, supply shortage of rice, especially the basmati variety, has escalated prices in the overseas markets as India's nearest and only competitor Pakistan failed to meet global demand.
India imported 5.3 million tonnes of palm oil which is estimated to go up to 5.8 million tonnes in 2008 and 6.5 million tonnes in 2009., said Dorab Mistry, director, Godrej International.
