KUALA LUMPUR: The Ministry of Plantation and Commodities (KPK) is confident the increase in import tax implemented by India on the price of Malaysian palm oil is temporary.
In a reply at the Dewan Rakyat sitting today, it said the increase was part of India's efforts to protect its domestic oil prices and support its domestic agricultural industry
"However, based on past experience, these tariff changes are usually temporary and their impact on Malaysia's palm oil imports is only short term. As the world's largest importer of palm oil with a population of 1.45 billion, India will always need palm oil to meet the country's domestic needs," it said in reply to Datuk Seri Hamzah Zainudin (PN-Larut) who asked the KPK to state short, medium and long-term strategic measures to deal with the impact on the Malaysian palm oil industry following the 32 per cent increase in import tax by India and the cut in the export levy rate by Indonesia.
According to the KPK, Malaysian palm oil remains relevant in India due to its widespread use as well as its advantages in terms of quality and sustainability, and previous experience shows that after the tariff changes, India continues to import palm oil to meet domestic demand.
"Malaysia has a long-term strategy through the ASEAN-India Free Trade Agreement and the Malaysia-India Comprehensive Economic Cooperation Agreement which limits the increase in India's import tax for crude palm oil (CPO) at 37.5 per cent and processed palm oil at 45 per cent.
"If necessary, Malaysia can also consider exempting export duty on CPO as a long-term measure to maintain competitiveness," it said.
Meanwhile, the KPK said that although Indonesia's policy change in the export levy rate had an impact on competition in the global market, Malaysia continued to maintain its position in the market through the production and export of sustainable and high-quality palm oil.
"As a long-term measure, the ministry through its agency which is the Malaysian Palm Oil Board will continue to strengthen the industry's competitiveness through research and development as well as the production of high value-added products such as bioplastics and biofuels for the global market," it said.