KUALA LUMPUR, July 18 2019 : The local palm oil sector is expected to face stiffer competition in India with the country’s Finance and Trade Ministries considering raising the palm oil duty from Malaysia to 50 per cent from 45 per cent.
Public Investment Bank (PIB) in a research note today said the proposed move would result in significant losses to Malaysian palm oil exporters following the loss of preferential duty over its Indonesian counterparts.
“It will put more pressure on Malaysian palm oil inventories in the coming months, as the second half production is expected to be seasonally higher,” it said.
The research house added that currently, there was a five per cent price differential between Malaysian and Indonesian refined palm oil.
“The proposal would be negative on Malaysia’s palm oil sector, which has been in the doldrums due to the weak crude palm oil (CPO) price performance. In the event it materialises, we expect weaker palm oil exports to India in the coming months,” it said.
India, which is the world largest palm oil importer, accounted for 28 per cent of total Malaysian palm oil imports for the first half this year.
Year-to-date, the average CPO price stood at RM1,980 per metric tonnes, down 17.6 per cent year-on-year.
The sector’s outlook remains neutral. – Bernama