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.