JAKARTA – Malaysia has surpassed Indonesia as the largest exporter of crude palm oil (CPO) to India, which is the world’s main consuming country, during the period of 2020-2021, after Indonesia applied higher export tax on the palm oil last year.
Based on data gathered by the Solvent Extractors’ Association (SEA), a vegetable oil trading company of India, the palm oil exports of Malaysia to India surged 238 percent to 2.42 million tons during the first seven months of the marketing year of 2020/21 which was started on 01 November 2020.
During the period, the shipping of Indonesian palm oil to India dropped by 32 percent to 2.0 million tons. It happened after Indonesia applied the higher export tax on the palm oil. Trading officials and analysts said that Indonesia’s palm oil export tax reached the highest level during the last five months.
“Malaysia is getting an advantage from the higher export tax in Indonesia. The country’s palm oil exporters are enabled to increase their market share by offering lower price than that offered by Indonesian exporters,” said B.V. Mehta, the executive director of SEA as reported by Antara on Wednesday, 23 June 2021.
But Sandeep Singh, a director of The Farm Trade, a consulting and trading company based in Kuala Lumpur, said that the increase of shipping from Malaysia to India will be limited as Indonesia will cut its palm oil export duty.
Indonesian Finance Minister Sri Mulyani Indrawati said on Monday, 21 June 2021 that the government will cut the ceiling of palm oil export duty from US$255 per ton to US$175 per ton, but without informing the time frame.
Indonesian palm oil exporters are charged at US$438 per ton in export tax and duty in June, while their counterparts in Malaysia are only charged at about US$90 per ton.
“It has enabled Malaysian exporters to sell their palm oil products with big discount and can still maintain a healthy margin,” said Anilkumar Bagani, a chief researcher at Sunvin Group, a vegetable oil trading company based in Mumbai, India.
Malaysian palm oil exporters offered a discount of US$100 per ton in May 2021. But now, they lowered the discount to US$25 per ton as Indonesia will reduce its palm oil export duty, dealers said.
Singh said that the reduction of the palm oil export duty will finally help Indonesian exporters to retake their market share.
“As the market has dropped significantly by more than 25% during the last two weeks, and discussions in Indonesia regarding the export duty reduction are proceeding, then the transition back to Indonesia will be possibly realized soon,” said Singh. (*)
Source: Kompas.com | Featured image via sawitplus.co
