Indonesia eyes CPO trade deal with India in April
Indonesia eyes CPO trade deal with India in April
Agencies, Jakarta
Indonesia will finalize in April a deal to sell crude palm oil and coal to India in return for railway tracks for the construction of a railway line in South Sumatra, Industry and Trade Minister Rini Soewandi said late Wednesday.
"Indonesia needs to set up a railway in Southern Sumatra and India needs CPO and coal," Rini told reporters. "We expect to finalize the scheme before President Megawati Soekarnoputri visits India on April 1."
Rini didn't explain the value of the counter trade deal, according to Dow Jones.
But Derom Bangun, chairman of the Indonesian Palm Oil Producers Association, said the counter trade will boost CPO exports to India by at least 200,000-300,000 metric tons for this year. Indonesia exported 1.6 million tons of CPO to India last year.
He said under the deal, India will export the railway tracks to Indonesia, to be used for building the railway line.
Meanwhile, Rini said Indonesia's request for India to cut by 10 percent its 65 percent import duty on CPO remains unresolved.
Rini urged her Indian counterpart to accept the request during a visit to India in mid-February.
However, Rini said the issue is now likely to be discussed between Megawati and Indian Prime Minister Atal Behari Vajpayee.
In a related development, Reuters reported from New Delhi that India had left customs duties on edible oils unchanged in its budget Thursday.
India raised the levies on edible oils sharply a year ago and traders in Malaysia and Indonesia had been expecting duty changes in the federal budget for 2002/2003, presented to parliament on Thursday by Finance Minister Yashwant Sinha.
The country imports 60 to 70 percent of its total oil imports in the form of palm oils, mainly from Malaysia and Indonesia.
It imported a record 4.83 million tons of edible oils in 2000/01 (November-October), up from 4.49 million tons in the previous year.
India raised import duties on most crude edible oils in last year's budget to 75 percent from a 35-55 percent range, and on refined oils to 85 percent from 45-65 percent to curb imports and shore up domestic prices. The duty on crude palm oil (CPO) was later lowered to 65 percent in October.
The levy on soyoil imports remained unchanged at 45 percent due to India's commitment to the World Trade Organization (WTO).
Malaysia's crude palm oil futures dropped after the budget made no mention of import duty changes.
At the close benchmark third-month May futures [KPOK2] were 31 ringgit lower at 1,150 ringgit (US$302.63) a ton after touching a low of 1,149 ringgit.
Some traders had speculated that India would keep palm oil duties unchanged but introduce excise duties for soyoil to protect domestic farmers.
"The budget is a disappointment. We had expected India to at least say something about soyoil," said one trader in Kuala Lumpur.