KUALA LUMPUR: Malaysia's palm oil sector remains well-positioned to maintain its foothold in India, despite a recent 20 per cent increase in import tax.
According to Malaysian Palm Oil Board (MPOB) Director-General Ahmad Parveez Ghulam Kadir, the tax hike is not a significant threat to the competitiveness of Malaysian palm oil in the Indian market.
While the increase may impact short-term demand, Malaysia's status as the world's second-largest palm oil producer and its stable supply give the sector a strong potential to retain its market position, Ahmad Parveez told Business Times.
"Palm oil is expected to continue a top choice due to its widespread use in cooking, especially in the HORECA (hotel, restaurant, and catering) sector in India.
"Therefore, at this point, the tax increase is not considered a major threat to the competitiveness of Malaysian palm oil in the Indian market," he said.
On average crude palm oil (CPO) prices, Ahmad Parveez said MPOB is optimistic it will remain stable this year given that the increase in India's import taxes also includes other edible oils.
"Therefore, CPO prices are expected to still be traded in the range of RM3,900 to RM4,200 per tonne. This current projection is also maintained based on several other factors, such as stable demand from other markets such as China and the European Union, as well as the potential increase in the use of Indonesian biodiesel, which should continue to curb the overflow of palm oil stocks in the global market," he added.
Meanwhile, SD Guthrie Bhd said the import tax hike has minimal impact on the company, adding that there is continued demand for its products.
The company said India remains a key market for its CPO and refined, bleached, and deodorised (RBD) palm olein.
"As consumption in India grows, the company's robust supply chains will meet that demand. Palm oil remains an essential part of India's edible oil sector and will continue to see healthy growth in the market," it added.
As one of the world's largest certified sustainable palm oil producers with a presence in over 100 countries, about 30 per cent of the company's output is exported to India, and the bulk of it is CPO.