Competition spurs KL to shift oil palm plants out of China

Competition spurs KL to shift oil palm plants out of China

KUALA LUMPUR (AFP): Malaysia may shift its oil palm refineries from China to India to maintain market share and to remain competitive, the official Bernama news agency said.

"We are in the process of changing the marketing strategies," Primary Industries Minister Lim Keng Yaik was quoted as saying by Bernama late Saturday.

"Palm oil refineries were set up in China in the early 1990's because of its huge market. Now we'll have to shift all these refineries to India," he added.

Malaysia is the world's largest palm oil producer, accounting for about 50 percent of the global output and 22 percent of the international oil and fats trade.

Lim said the move was prompted by policy developments in China and India.

China had limited its import quota to one million tons but India did not impose any limits on imports, he said.

Lim also said even though India hiked its import tariffs of processed palm oil by 11 percent to 27.5 percent, it maintained its import tariff for crude palm oil at a rate of 16.5 per cent.

Hence, the shifting or investing in refineries to India would enable Malaysian exporters to refine and sell palm oil more competitively in the Indian market, he said.

Lim said India was now Malaysia's largest importer of palm oil, with 2.4 million tons, adding any failure to change strategies would hamper Malaysia's plan to maintain its market share.

Competition would not be from neighboring Indonesia but from Latin American countries, mainly Argentina and Brazil, and also the United States, which produces soyabean oil and sunflower oil -- competitors to palm oil, he said

Lim said soyabean oil and sunflower oil fetched better prices because genetically modified methods were used manage production, while Brazil's move to devalue its currency by 50 percent aided demand.

In an attempt to secure new markets, he said, Malaysia would explore the possibility of finding buyers among least developing countries with high populations.