India Gives Malaysia SIX MONTHS.

Here is some economic news :

MUMBAI (Sept 5) India raised tax on refined palm oil from Msia to 50% from 45% 

for six months to curb imports and boost local refining

(OSTB : The story changes a little - the other day they said the higher tax was to encourage local vegetable oil growing like groundnuts etc. Now they say to boost local refining - nothing about encouraging local vegetable oil growers. Do read on.)

world’s biggest edible oil importer 

currently imposes 40% tax on crude palm oil 

and 50% on refined palm oils

since Jan 2019, shipments of refined palm oils from M'sia taxed at 45%

under an agreement with Malaysia

This reduced effective difference in duty between CPO and refined palm oil from Malaysia for Indian refiners to 5.5% from 11%, making overseas buying of refined palm more lucrative.

That led to a 727% surge in M'sia’s refined palm exports to India in 1st half 2019 to 1.57m tonnes compared with same period year before, according to M'sian Palm Oil Board.

India said rising imports of refined palm oil hit local Indian refiners 

filed application with Directorate General of Trade Remedies for investigation

recommended raising import tax on refined products

50% duty on refined products applicable until March 2, 2020

hike in duty on refined palm oil will prompt Indian buyers to switch to CPO

Importing refined palm oil no longer attractive

From Oct imports of CPO could rise and refined palm will go down

India imports palm oil mainly from Indon and M'sia

Indon traditionally supply 2/3 of India’s palm oil imports

1st half 2019 M'sia surpassed Indon due to duty advantage

Indon to regain market share again in coming months

Indon CPO more competitive than M'sia

Palm oil accounts for 2/3 of India’s vegetable oil imports

My comments :  For some reason this looks like a playoff by the Indians against Malaysia and Indonesia. In January the Indians reduced the import duty by 5% for refined palm oil  specially from Malaysia only. The other major supplier was Indonesia.  But the Indons export more CPO (crude palm oil) to India. The Indons are better at plain CPO. 

Now the Indians have removed that 5% tax cut for Malaysian refined palm oil. Which effectively makes importing refined palm oil (from Malaysia) less attractive in India.

The beneficiaries (according to The Edge above) will be Indonesia which has an advantage in CPO exports to India.

Plus this also means that local Indian oil refiners will also have better business. 

Plus the Indian government collects back that 5% import tax.

Bottom line is exports of refined palm oil from Malaysia to India will decrease. 

Indonesian exports will increase.

To help the palm oil industry our minister said Malaysians should drink one or two table spoons of palm oil everyday.

Hi YB, so have you had your tablespoonful of palm oil already?

This is quite misinformed.

Malaysians drinking two tablespoons of palm oil will not even dent the loss of palm oil exports to India.

Secondly Malaysians already consume MORE THAN two tablespoonfuls of palm oil everyday (per person). Almost all our cooking (Malay, Chinese, Indian) uses cooking oil - which is 99% palm oil. 

You fry an egg you use palm oil. Mee goreng, kuey teow, kangkong belacan, fish curry, chicken curry, mee kari everything uses cooking oil, usually palm oil. 

So maybe the minister should consider suggesting that Malaysians drink a whole cup of palm oil per day.

But what happens after the SIX MONTHS?

Felda needs RM6 billion bailout.

Tabung Haji needs to be bailed out.

Jangan main main. Be serious.