Business

Analysts think India’s refined palm oil ban will have limited effect on Malaysian economy

Ahirul Ahirudin
Written by Ahirul Ahirudin

KUALA LUMPUR – January 9, 2020: Economic analysts have warned that India’s latest ban on refined palm oil import into that country will affect the Malaysian economy but not in a too damaging way.

It was reported yesterday that India had banned the imports of refined palm oil from Malaysia and that it was believed to be a retaliation to Prime Minister Tun Dr. Mahathir Mohamad’s criticism on the Kashmir issue and and new citizenship law.

“This action by the Indian government will definitely affect the Malaysian economy but I doubt that they will enforce it fully because they have to find substitute products in such a huge volume. I don’t think even local Indian suppliers of vegetable oil can cope,” said Associate Professor Dr. Ahmed Razman Abdul Latif of the Putra Business School.

As for the crude palm oil price, he believes it will not be affected too much since worldwide demand is ever increasing.

When queried on what Malaysia can do to cushion the impact of the ban, he said this is already done by not depending on a single country to export to.

“Indonesia is ramping up demand for biodiesel which will definitely help to boost Malaysian export and the trade war between the US and China also helps to increase the demand for Malaysian palm oil to substitute soy bean oil.

“At the same time Malaysia can also diversify its palm oil-based products,” he said.

His opinion was echoed by Professor Dr. Faridah Hassan of Universiti Teknologi Mara who said that CPO prices will only be affected if Malaysia cannot find an alternative buyer.

“China had also increased its import of CPO from Malaysia lately and this should compensate for the loss from India,” she said.

Faridah is of the view that Malaysia should continue with its stance and improve trade with other countries.

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Ahirul Ahirudin

Ahirul Ahirudin