KUALA LUMPUR (Dec 11): The Ministry of Plantation and Commodities is confident the increase in import tax implemented by India on the price of Malaysian palm oil is temporary.
In a reply at the Dewan Rakyat sitting on Wednesday, it said the increase was part of India’s efforts to protect its domestic oil prices and support its domestic agricultural industry.
“However, based on past experience, these tariff changes are usually temporary, and their impact on palm oil imports from Malaysia is only short-term. As the world’s largest importer of palm oil with a population of 1.45 billion, India will always need palm oil to meet the country’s domestic needs,” it said in reply to Datuk Seri Hamzah Zainudin (Perikatan Nasional-Larut), who asked the ministry to state short-, medium- and long-term strategic measures to deal with the impact on the Malaysian palm oil industry following the 32% increase in import tax by India and a cut in the export levy rate by Indonesia.
According to the ministry, Malaysian palm oil remains relevant in India due to its widespread use as well as its advantages in terms of quality and sustainability, and previous experience shows that after the tariff changes, India continued to import palm oil to meet domestic demand.
“Malaysia has a long-term strategy, through the Asean-India Free Trade Agreement and the Malaysia-India Comprehensive Economic Cooperation Agreement, which limits the increase in India’s import tax for crude palm oil (CPO) at 37.5% and processed palm oil at 45%.
“If necessary, Malaysia can also consider exempting export duty on CPO as a long-term measure to maintain competitiveness,” it said.
Meanwhile, the ministry said that although Indonesia’s policy change in the export levy rate had an impact on competition in the global market, Malaysia continued to maintain its position in the market through the production and export of sustainable and high-quality palm oil.
“As a long-term measure, the ministry through its agency, which is the Malaysian Palm Oil Board, will continue to strengthen the industry’s competitiveness through research and development, as well as the production of high-value-added products, such as bioplastics and biofuels, for the global market,” it said.
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