Sub Continent (Jan – Sep) 2019

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

No.CountryJan-Sept 2019Jan-Sept 2018Difference (MT)Difference (%)
3Sri Lanka62,520170,632(108,112.0)(63.4)
 Grand Total4,999,0013,263,1281,735,872.7 53.2
Source: MPOB

The overall exports of Malaysian palm oil to this region during the Jan-Sept 2019 period was 4,999,001 MT. This is an increase by 1,735,872.7 MT or by 53.2% compared to the same period of 2018 contributed by higher import by India. India contributed to 78% of the total MPO import by the Sub Continent region for the Jan – Sept 2019 period.

There was significant reduction in MPO import by Bangladesh, which fell by 65% or 152,927 MT and Sri Lanka which declined by 63.4% or 98,499 MT. This is because Bangladesh imported a high amount of soybean oil during Jan-Sept 2019 period which increased by more than 60% compared to Jan-Sept 2018 due to the narrowing discount between palm oil and soybean oil.  There was also a slight decrease in MPO imports in Pakistan by 5.2% or 45,373 MT due to the duty free export of CPO from Indonesia.

As for Sri Lanka, the drop in Malaysian palm oil export was mainly due to reduction of import duties by India. Previously, Sri Lanka was importing large volumes of Malaysian palm oil which then re-exported to India as local traders took advantage of the India-Sri Lanka Free Trade Agreement to export products to India at zero duty. However, with the reduction in import duties for palm oil from Malaysia by the Indian Government, it was more attractive for importers in India to import directly from Malaysia and as a result indirect imports of MPO through Sri Lanka has also dropped.

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

Malaysian Palm Products Export to Sub Cont Region (By Products)
ProductJan-Sept 2019Jan-Sept 2018Diff (MT)Diff (%)
RBD PL2,710,6941,087,4411,623,252.6149.3
CO / DPL211,806132,86878,937.359.4
RBD PO75,456257,731(182,275.5)(70.7)
RBD PS23,52920,9042,625.012.6
TOTAL4,999,0013,263,1291,735,870.6 53.2
Source: MPOB

Malaysian Palm Products Export to India (By Products)
ProductJan-Sept 2019Jan-Sept 2018Diff (MT)Diff (%)
RBD PL2,272,444287,2341,985,210691.1
Source: MPOB

The exports of palm products from Malaysia to India increased by 2,019,996 MT or 107% for Jan-Sept 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. 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-Sept 2019Jan-Sept 2018Diff (MT)Diff (%)
RBD PL366,114584,039(217,924.4)(37.3)
CO / DPL156,496125,84030,656.824.4
RBD PO84,83546,84037,995.081.1
Source: MPOB

The export of palm products from Malaysia to Pakistan decreased by 45,373.5 MT or 5.2% in Jan-Sept 2019 compared with the same period of last year. This decline is primarily because of the duty-free export of CPO 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 37.3% or by 217,924.4 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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