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Malaysia set to outpace Indonesian palm oil exports to India
Indonesia must find a way to strike a deal with India on palm oil imports if it wants to keep pace with Malaysia’s growing palm oil exports to the country.
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Harvest time: A worker gathers oil palm fruit bunches at a plantation in Lampung. Indonesia and Malaysia, the first- and second-largest palm oil producers, have threatened to challenge the European Union via the World Trade Organization if the EU continues to phase out palm oil from transportation fuel. (The Jakarta Post/R. Berto Wedhatama)
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alaysia is set to outpace Indonesia in palm oil exports to India unless Jakarta can strike a deal that would help it stay competitive with Kuala Lumpur in the world's largest edible oils market.
Malaysia exported 2.14 million tons of palm oil to India in the first half of the year, according to data from the Indian department of commerce. It surpassed all of last year's exports of 2.08 million tons to India on the back of favorable import duties, experts have said.
In comparison, Indonesia's total palm oil exports to India from January-June stood at 2.13 million tons, just over a third of its entire 2018 export shipment of 5.92 million tons.
The Indonesian government is currently looking at other export destinations for palm oil amid tensions with the European Union over biodiesel - a crude palm oil (CPO) derivative - with Brussels threatening to impose import duties on Indonesian biodiesel products. The move is part of the EU's earlier decision to phase out palm oil use by 2030 over deforestation concerns.
With annual consumption of palm oil hovering above 9.5 million tons, India's massive market represents a potential alternative to Europe, if not for the existing trade barrier that favors Malaysian palm oil over its Indonesian brethren.
Under the Comprehensive Economic Cooperation Agreement that India and Malaysia signed in 2011, Kuala Lumpur has been enjoying lower tariffs compared to Indonesia and other CPO exporters.
"Both India and Indonesia are struggling because of that [duty structure]," said Dipanker Gyan, a senior commodities analyst at the New Delhi-based Agriwatch research and consultancy group, on Tuesday.
