RI to lobby India to lower CPO import tarrif

The Jakarta Post, Jakarta

Minister of Industry and Trade Rini M. Soewandi said that the government would lobby India to lower its high import tariff on crude palm oil (CPO) by 10 percent to help boost the competitiveness of the commodity in the lucrative Indian market.

"Our palm oil products are not competitive in India now, because the import tariff is still much higher compared with the tariff on soy bean oil (a substitute product)," Rini told reporters.

Rini said that she would visit India on Feb. 19 to hold talks with her Indian counterpart and key CPO players over the issue.

India, the world's largest edible oil buyer, applies an import tariff of 65 percent on CPO products and 45 percent on soy bean oil.

The competition from substitute soybean oil had been one of the factors pressuring the price of CPO, but a decline in soybean production should increase demand for palm oil.

India imports around 4 million tons of palm oil per year.

Indonesia, the world's largest CPO producer after Malaysia, annually exports about 1.6 million tons of palm oil to India.

Indonesia produced more than 8 million tons of palm oil in 2001, of which more than 60 percent was exported.

Meanwhile, Derom Bangun, chairman of the Indonesian Palm Oil Producers Association (Gapki) told The Jakarta Post that the high import tariff on CPO, imposed by India in October 2001, had caused a decline in the volume of Indonesian CPO exports to India.

"Our exports to India will continue to decline this year if India maintains its hefty import tariff," he said

"This is a good opportunity for Indonesia to lobby India to reduce the tariff in a bid to increase CPO exports to India," Derom said.