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Palm oil import from Indonesia seen tripling

18 November, 2011

ISLAMABAD: Pakistan is expected to at least triple palm oil purchases from Indonesia next year after a trade agreement between the two countries reduced import duties for the edible oil by about 15 per cent, senior industry officials said on Thursday.

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Pakistan, the world’s fourth largest buyer of palm oil, purchases more than 90 percent of its needs from Malaysia, as its crude palm oil and products have enjoyed lower import duties since 2007. But the preferential trade agreement signed by Pakistan and Indonesia in September, and which officials said would be implemented by January 2012, would put tariffs on imports of crude palm oil and products from Indonesia on par with those from rival Malaysia.

Pakistan now taxes Indonesian palm oil and products by between of 9,500 and 10,800 rupees ($110 and $120) a tonne. The new tariff structure has yet to be announced. Indonesian palm oil accounted for 55 percent of Pakistan’s imports before Malaysia started receiving preferential duties.

“There will be a shift... and we expect the Indonesian share to increase by 30 to 35 percent from the existing 10 percent,” Rasheed Janmohammad, vice chairman of the Pakistan Edible Oil Refiners’ Association, told Reuters.

Indonesia is the world’s largest producer of palm oil and recently changed the structure of its export taxes to favour refined product in an attempt to boost its own industry.

“In the first year, Indonesia’s share should be about 35-40 percent and the year after that it will gain a major share in Pakistan’s market,” added Akbar Puri, chief executive officer of the Karachi-based Jaleel Brothers.

“Palm oil import from Indonesia is already showing an upward trend, even before the implementation of the preferential trade agreement,” Puri said. Pakistan imported $1.83 billion worth of crude palm oil and palm oil products in the 2010-11 (July-June) financial year and dealers said the bulk of it came from Malaysia.

Pakistan bought 96,500 tonnes of Malaysian palm oil in the first 15 days of November, cargo surveyor Societe Generale de Surveillance said on Tuesday.

Janmohammad expected another 50,000 to 60,000 tonnes of palm oil imports in November, but said buying will be relatively slow in December after two months of stocking up spurred by lower prices.


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