12/12/05 JAKARTA, (Asia Pulse) - The Asean Vegetables Oil Club (AVOC) said it is impossible for Malaysia and Indonesia, the world's largest and second largest producers of crude palm oil [CPO], to set the price of the commodity.
The prices are determined by the market mechanism and attempts to set the price would mean committing cartel and it would against the principle of free trade, AVOC chairman Derom Bangun said.
Industry Minister Fahmi Idris said Malaysia and Indonesia have never come to term to set the price of palm oil in the world market.
"This problem cannot be settled in a ministerial meeting. It should be settled at the level of heads of state," Idris said.
Bangun said palm oil companies in the two countries have not sought to undercut prices in order to increase exports.
A number of importing countries such as India, Pakistan and a number of European countries have bought Indonesian CPO at lower prices but not because Indonesia slashed the prices, he said.
There are reasons for the lower prices such as inadequate port infrastructure in Indonesia, resulting in additional costs to be paid by the importers, he said.
In addition, Indonesia is lagging behind Malaysia in promoting its products in international markets, Bangun said.