Sub Continent (Jan – Oct) 2019

Malaysian Palm Oil Export to Sub Continent Region
(Jan – Oct 2019)
A Review on MPO Export Performance

No.CountryJan-Oct 2019Jan-Oct 2018Difference (MT)Difference (%)
4Sri Lanka72,073190,554-118,481.00-62.2
 Grand Total5,383,6033,549,3521,834,251.0051.7
Source: MPOB

The overall exports of Malaysian palm oil to this region during the Jan-Oct 2019 period was 5,383,603 MT. This is an increase by 1,834,251 MT or by 51.7 % compared to the same period of 2018 and the reason for this increase can be attributed to the higher import from India which comprise of 76.6% of the total MPO import by the Sub Continent region for the Jan- Oct 2019 period.

There was significant reduction in MPO import by Bangladesh, which fell by 49.3% or 138,893 MT and Sri Lanka which declined by 62.2% or 118,481 MT. This is because Bangladesh imported a higher amount of soybean oil which increased by more than 75% compared to Jan-Oct 2018 due to the narrowing discount between palm oil and soybean oil.  There was also a slight decrease in MPO imports in Pakistan by 7.1% or 69,116 MT due to the favourable duty structure of Indonesian CPO since the signing of the PTA between the two countries.

As for Sri Lanka, the drop in Malaysian palm oil export was mainly due to revision of import duties by India where previously, Sri Lanka was importing large volumes of Malaysian palm oil which were then re-exported to India. The reason this is done was local traders took advantage of the India-Sri Lanka Free Trade Agreement to re-export products to India which was at zero duty. However, with the reduction in import duties for palm oil import by the Indian Government on Malaysian palm oil, made it more attractive for importers in India to import directly and as a result indirect imports of MPO through Sri Lanka dropped.

Breakdown of MPO Export (MT) to the Sub Continent Region Jan – Oct 2019

Malaysian Palm Products Export to Sub Cont Region  (By Products)

ProductJan- Oct 2019Jan- Oct 2018Diff (MT)Diff (%)
RBD PL2,823,7731,208,9011,614,872.1133.6
CO / DPL236,743155,27681,466.852.5
RBD PO119,24779,33939,908.650.3
RBD PS24,75222,0772,674.912.1
TOTAL5,383,6033,549,0491,834,554.7 51.7
Source: MPOB

Malaysian Palm Products Export to India (By Products)

ProductJan- Oct 2019Jan- Oct 2018Diff (MT)Diff (%)
RBD PL2,313,822300,4532,013,368670.1
Source: MPOB

The exports of palm products from Malaysia to India increased by 2,140,617 MT or 107.7 % for Jan-Oct 2019, when compared with the same period of last year. The reason for the increase is due to new import duty with effective of 1 January 2019 that provided advantage to Malaysian palm oil compared to Indonesian palm oil. This has resulted into sharp increase in the import of Malaysian RBD PL, by 670.1% but instead saw a reduction in the import of CPO which dropped by 4.1%. However, in September 2019, Government of India announced that they are implementing the Bilateral Safeguard Measure under MICECA agreement, citing unfavourable trade from Malaysia. Under this measure, Malaysian RBD Palm Olein’s import duty has increased to 50% compared to pre-implementation at 45%. This makes the import duties of Malaysian and Indonesian RBD palm olein on a level playing field.

Malaysian Palm Products Export to Pakistan  (By Products)

ProductJan- Oct 2019Jan- Oct 2018Diff (MT)Diff (%)
RBD PL406,865644,428(237,563.7)(36.9)
CO / DPL176,101146,56329,538.020.2
RBD PO92,01347,11644,896.295.3
Source: MPOB

The export of palm products from Malaysia to Pakistan decreased by 68,854.7 MT or 7.1% in Jan-Oct 2019 compared with the same period of last year. This decline is primarily because of the favourable duty structure on palm oil export from Indonesia which has resulted in large quantities of CPO coming from Indonesia.  In early July 2019, Pakistan announced an increase in Additional Custom Duty from 2% to 7% while Central Excise Duty was increased from 16% to 17%. However, after immense pressure from the edible oil manufacturers and consumer watch groups, the Additional Custom Duty was reduced to 2% but the Central Excise Duty rate remained in force. Export of Malaysian RBD PL to Pakistan declined by 36.9% or by 237,563.7 MT. Other factors attributed to the decline was sharp devaluation in the rupee, disruption in lifting cargo from ports and long waiting time for ships to discharge at Port Qasim.

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