Pakistan to boost palm oil imports from Indonesia on tax cut

KARACHI: Pakistan, the world’s third-largest buyer of palm oil, may boost purchases from Indonesia next year after it agreed to slash a tax on imports under a free-trade treaty, reducing dependence on Malaysia.

Purchases from Indonesia, the biggest producer, may increase to as much as 30 percent of Pakistan’s annual imports of about 1.9 million metric tons from an estimated 5 percent this year, Abdul Rasheed Janmohammad, vice chairman of Pakistan Edible Oil Refiners Association, said in an interview with Bloomberg.

The free-trade agreement with Indonesia, effective from January 1, will help Pakistan lower its reliance on Malaysia for supplying its cooking oil needs. Under the treaty, South Asian nation will reduce by 15 percent duty it levies on palm oil, Commerce Secretary Zafar Mahmood said. “Pakistan’s industry will benefit because of the different options,” Janmohammad said. “We will have two regions to deal with and competition will become tough.”

Pakistan meets about 80 percent of its needs through imports mainly from Malaysia, with which it signed a similar agreement three years earlier, Janmohammad said. Importers from Pakistan may continue to make bulk of their purchases from Malaysia as it has better port facilities, he said. Crude palm oil imports this year may increase as much as 30 percent from 492,000 tons last year, he said.

Purchases totaled 442,000 tons in eight months through August 31. “We will be importing more of crude this year,” Janmohammad said. “It’s a lot cheaper than refined.”

Pakistan imported 1.25 million tons of edible oils in eight months ended August 31, compared with 1.175 million tons a year earlier, according to refiners’ association. The country bought 1.93 million tons of palm oil in 2010.

Rapeseed imports may total 776,000 tons in the year ending December 31, more than 700,000 tons forecast in July, Janmohammad said. The nation bought 1.16 million tons of oilseed in 2010. Damage to cotton crop from flooding in Sindh province may reduce cotton-seed oil supplies by about 100,000 tons, he added.

Copyright PPI (Pakistan Press International), 2011