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ISLAMABAD: Pakistan needs to make a formal request to the Indonesian ambassador to resume supply of palm oil to Pakistan on humanitarian grounds as global supply of basic and essential food commodities needs to continue without interpretation.

Talking to Business Recorder here on Saturday, Abdul Waheed, former chairman Pakistan Vanaspati Manufactures Association (PVMA), said that it is a basic issue of human rights which needs to be considered by our brotherly Islamic country. The impact of Indonesia’s government decision to ban the export of palm oil in general and palm olein, in particular, would create a serious shortage of the commodity in Pakistan.

Indonesia has extraordinary production of palm oil, but whether it has maximum storage capacity to handle such huge quantities domestically? The country can bound its industry to consume the commodity as per domestic requirements and export remaining palm oil based on allocated quota.

Indonesia suspends all exports of palm oil

Waheed referred to the statement of Ambassador of Indonesia to Pakistan, Adam Mulawarman Tugio that the Indonesian government has temporarily banned global palm oil exports to regulate local markets and provide subsidised palm oil to locals. Considering the global trade dynamics and the global supply chain, the decision was made on palm oil exports, which would improve price stability in Indonesia’s domestic market.

The ambassador also acknowledged that Pakistan was a big consumer of Indonesian palm oil and Pakistan was importing $2.8 billion worth of palm oil annually from Indonesia.

The former chairman PVMA said that we have sufficient stocks to cover 4 to 6 weeks, so there will be no shortage of ghee in the short term and its price remained stable in the market during the last days of Ramzan.

Waheed elaborated that under the Free Trade Agreement between Pakistan and Indonesia, the import of this essential food commodity should continue by lifting the ban.

The PVMA showed great concern on the decision of Indonesia’s Government to ban the export Palm Olein. PVMA conveyed to the government that RBD Palm Olein is available at discounted price as compared to the other soft oils. Manufacturers of ghee use 70 percent of RBD palm oil in the production of ghee but ban on Palm Olein will push manufacturers towards the use of canola, soybean and sunflower oil which are far more expensive as compared to the Palm Olein.

Both the ministries and the PVMA resolved that the Government of Pakistan will take up the matter with the Indonesian government on urgent basis and will demand exemption from the ban as we have inked Free Trade Agreement with Indonesia which was signed in 2013.

Indonesia's palm oil export ban heats up vegetable oil market

He maintained that if the ban announced by Indonesia continues for a longer period the international price of Palm Oil products will rise substantially, which will impede its imports and may result in dwindling domestic stocks from June onwards.

Therefore, the government and PVMA must now initiate steps to counter the imminent increase in price of domestic end products.

He added that the pressure on Palm Olein in international market and continuous depreciation of Pak rupee against USD will have big effect on ghee prices; therefore, it is need of time to review and revise downwards the prevailing duty structure on import of edible oil in upcoming fiscal budget. PVMA and government decided to hold a series of meetings on the issue and decided to take the Prime Minster on board, as well.

Copyright Business Recorder, 2022

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