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UPDATE 1-India palm import curbs to start Malaysia, Indonesia price war- association

Published 09/01/2020, 08:02
Updated 09/01/2020, 08:09
© Reuters.  UPDATE 1-India palm import curbs to start Malaysia, Indonesia price war- association
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* India on Wednesday put curbs on refined palm oil imports

* Malaysia refined palm body says it will lose market share

(Adds details, quotes from paragraph 3 to 13)

By Mei Mei Chu

KUALA LUMPUR, Jan 9 (Reuters) - India's restrictions on

imports of refined palm oil will lead to a loss of market share

for Malaysia and spark a price war with rival supplier,

Indonesia, a Malaysian industry association said on Thursday.

India, the world's biggest edible oil buyer, issued a

notification on Wednesday amending imports of refined palm oil

to "restricted", a move that industry sources said amounted to

an effective ban.

The move was seen as punishing Malaysia, India's main

supplier of refined palm oil, for criticism of its policies by

Mahathir Mohamad, the 94-year-old outspoken prime minister of

Muslim-majority Malaysia. Indonesia is the world's biggest

exporter of crude palm oil. The Palm Oil Refiners Association of Malaysia (PORAM) said

the move meant Malaysia would now have to compete on crude palm

sales to India, where Indonesia has traditionally been more cost

competitive.

"This puts Indonesia and Malaysia at loggerheads. There will

be a price war between Indonesia and Malaysia, and we are at the

losing end," said PORAM Chairman Jamil Haron told Reuters.

"We can still sell crude palm oil, but now we need to

compete with Indonesia."

Haron said the restrictions on refined palm oil could be in

the form of quotas and more regulations.

Malaysia last year overtook Indonesia as India's biggest

palm oil supplier after it won a lower duty for refined palm oil

imports. The Southeast Asian neighbours account for 85% of the global

palm oil production. Palm oil is Malaysia's biggest agricultural

export, accounting for 2.8% of its gross domestic product and

4.5% of total exports.

A Kuala Lumpur-based trader, who did not want to be named

citing company policy, said Malaysia's exports would start

falling from end-January after current contracts end.

Malaysia exported an estimated 3.9 million tonnes of palm

oil to India in 2019. Of this 2.04 million tonnes was palmolein

which is used as a cooking agent, according to Refinitiv data.

PORAM members include top industry players including Sime

Darby Plantation SIPL.KL , Cargill Palm Products, FGV

Refineries, IOI Edible Oils and Wilmar Edible Oils.

Malaysian Palm Oil Association Chief Executive Nageeb Wahab

said the curbs on refined palm oil exports would benefit Indian

refiners.

Mahathir said in October India "invaded and occupied"

Kashmir, a disputed mainly Muslim region also claimed by

Pakistan. Last month, he said India was stoking unrest with its

new religion-based citizenship law that excludes Muslims.

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