Bad News, Malaysia Beats Indonesia To Become The Main Supplier Of Palm Oil In India, Because Of Sri Mulyani's Policy?

JAKARTA - Malaysia has surpassed Indonesia to become the biggest exporter of crude palm oil (CPO) to top consumer India in 2020/21, after Indonesia imposed higher taxes on vegetable oil exports last year, industry officials told Reuters.

Malaysian palm oil exports to India jumped 238 percent to 2.42 million tonnes in the first seven months of the 2020/21 marketing year starting on November 1, according to data compiled by The Solvent Extractors' Association of India (SEA), a refiners trade body. and Indian vegetable oil traders.

During that period, Indonesian palm oil shipments to India fell 32 percent to 2 million tons. It came after Indonesia imposed higher taxes on crude palm oil exports in December to raise funds for an ambitious palm-based biodiesel program, which aims to maximize the use of vegetable oils domestically.

Indonesia's export tax is at its highest level for five straight months, according to trade officials.

"Malaysia benefits from Indonesia's export tax. They gain market share by offering palm oil at a discount compared to Indonesia's supply," said BV Mehta, executive director of SEA, quoted from Antara, Friday, June 25.

However, the increase in Malaysian shipments to India will soon be limited as Indonesia will cut export taxes, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.

Indonesian Finance Minister Sri Mulyani Indrawati said on Monday 21 June that the government would cut the ceiling rate for the CPO export tax to US$175 per tonne from US$255, without giving a timeframe.

Indonesia's top producer imposed duties and taxes of US$438 per tonne on shipments of palm oil in June. In comparison, the June export duty on rival Malaysia was nearly $90.

That helps Malaysian exporters to offer palm oil at deep discounts even after maintaining healthy margins, said Anilkumar Bagani, head of research at Mumbai-based edible oil brokerage Sunvin Group.

Malaysian exporters offered a discount of US$100 per tonne in May but are now offering a smaller discount of US$25 as Indonesia will reduce export taxes, dealers said.

Export tax cuts could eventually help Indonesia regain market share, Singh said.

"With the market experiencing a sharp decline of more than 25 percent in the last two weeks and also discussions about reducing Indonesia's oil tax, a shift back to Indonesia may be imminent," Singh said.