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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

08/11/2001

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

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NULL

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HEADLINE

MALAYSIAN TRADE AWAITS CRUDE PALM OIL EXPORT BOOST
KUALA LUMPUR, Nov 2 (Reuters) - Malaysian palm oil traders said on Fridaythey expected the government to announce by next week a new quota forduty-free exports of crude palm oil (CPO) after India, the biggest buyer,cut import tariffs.A one million tonne allocation for this year was exhausted in Octoberand a new quota was needed if Malaysia was to shield its market share inIndia from arch-rival Indonesia, they said."I expect the government to announce a CPO export quota by next week,otherwise the Indonesians are going to go for the kill," said a trader ata Kuala Lumpur palm oil brokerage.Malaysia, the world's number one palm oil producer and refiner,traditionally slaps a high export duty on CPO to encourage the sale of oilin its refined form.Indonesia, the second largest producer, by contrast exports most of itsoil raw due to its limited refining capacity.Malaysia's problems began two years ago when India decided to raiseimport duties on refined edible oils such as palm olein, which it buysmostly from Kuala Lumpur, to protect its own oilseed growers from foreigncompetition.The move led to a windfall for Indonesia's exporters of CPO, taxedlower than olein on arrival in India. Not wanting to be outdone, Malaysiahas since allowed duty-free CPO exports not amounting to more than amillion tonnes a year.

MALAYSIA MUST MOVE FASTTraders said India's duty cut this week, which brought the entry tax onCPO to 65 percent from 75, would boost Indonesia's share of the Indianmarket if Malaysia did not move quickly.They pointed out that the import tax on olein, Malaysia's major oilproduct, was still high at 92.4 percent.Dealers said Malaysian Primary Industries Minister Lim Keng Yaik, inJakarta this week for talks on cooperation in commodity trade, mightannounce a new export quota for CPO when he returned to his office inKuala Lumpur on Monday."We don't buy any of these Indonesian-Malaysian cooperation talks,"said another Kuala Lumpur-based trader. "I think the minister will beraring to come back and seize the first opportunity he can get for hisexporters."Malaysia and Indonesia reached a broad deal in February to cooperate inboosting palm oil prices during market slumps.But little action has followed.Dealers pointed out that the Indian duty cut did not come from theso-called cooperation but was the result of intense lobbying by Malaysiawhen Indian Prime Minister Atal Behari Vajpayee visited Kuala Lumpurearlier this year.Vajpayee, who promised Malaysia a review of import duties, kept hispledge this week, introducing a cut for the first time in two yearsdespite continuous demands to protect local farmers.Malaysian palm oil futures, bullish since last week on good exports forOctober, extended their run on news of the duty cut. On Friday thebenchmark January contract extended its gains since October 24 to 100ringgit, settling at 1,030 ringgit ($271.05) a tonne.($1=3.8 ringgit)