RI to lobby India to cut CPO import tariff: Minister

Zakki P. Hakim, The Jakarta Post, Jakarta

Minister of Agriculture Anton Apriyantono will leave for India this week to try to convince his Indian counterpart to revoke the latter's decision to raise crude palm oil (CPO) import duty to 80 percent.

Indonesia would ask India, the country's second largest CPO importer after China, to maintain the rate of 65 percent, Anton said, adding that Indonesia would be ready to offer incentives for India in return.

"We are ready to offer India the opportunity to export sugar to us in return for lowering the import duty," Anton told reporters after a meeting with the minister of trade and local associations.

Anton said that India had always had great interest in exporting its agricultural products, in particular meat and milk, aside from sugar, to Indonesia, although he ruled out the possibility of importing India's meat and milk, as India was not free of foot and mouth disease.

"But we can buy their sugar. We are a very strong buyer," he said, adding that the meeting would be held on the sidelines of ministerial talks, slated for April 17 to April 19 in New Delhi.

This year, Indonesia has set a quota to import 500,000 tons of sugar, up from last year planned quota of 400,000 tons. However, last year's actual import only reached 200,000 tons, mostly from Thailand.

G20 is a group of developing nations promoting its interests in agricultural negotiations in the World Trade Organization (WTO).

The Indian government recently hiked CPO import duty from 65 to 80 percent to provide protection to its farmers who make a living by growing soybean, a major vegetable oil commonly used as a substitute to palm oil.

The move is not against WTO rulings with India having secured a commitment allowing it to set a ceiling tariff for certain products of up to 300 percent. The commitment allows India to set its CPO import duty anywhere between zero and 300 percent.

"Later on, we will also negotiate in the WTO for India to reduce the 300 percent commitment," Anton said.

He said that Indonesia had yet to talk with Malaysia to jointly lobby India on the issue, but should the meeting fail to come up with a productive result, such a possibility would not be ruled out.

After Malaysia, Indonesia is the world's second largest exporter of palm oil -- a raw material for, among other things, cooking oil, soap and detergent.

Output from the two countries is expected to make up about 85 percent of this year's global palm oil production.

India's decision is feared to hamper Indonesia's target to up its export to India.

Earlier, Indonesian Palm Oil Producers Association (Gapki) chairman Derom Bangun said the association expected to increase CPO exports to India to 1.2 million tons this year from last year's 960,000 tons.

Indonesia total exports, meanwhile, were projected to reach 7.8 million tons, up from last year's estimated 7 million tons.

China and India are Indonesia's main CPO markets. Indonesia also exports to Pakistan, Bangladesh, the Netherlands and to new markets such as eastern Europe.

The country is expected to produce 11.6 million tons of palm oil this year, compared to last year's estimated 10.8 million tons.

Elsewhere, Anton also said that beside crude palm oil import duty, the negotiation would also include Indonesia's request for India to ease its health-related export requirements for olein, a crude palm derivative.