The Palm Scribe

Indonesia palm oil exports to India After Malaysia’s spat: Solidarity? Yes! Opportunity? Maybe

Photo: AFP

Indonesia’s palm oil business is opting to remain on a “wait and see” mode and is not jumping at the opportunity to boost its palm oil exports to India, which is mulling to cut down its intake from Malaysia following tension over the Kashmir issue.

“Sure it’s a big opportunity. India, Pakistan and its surrounding areas are one of the important focuses of our efforts in expanding palm oil exports,” Tungkot Sipayung, Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (PASPI) told The Palm Scribe. He added, however, that although South Asia has been the focus of trade diplomacy and the palm oil association for the past two years, “It would be unethical to openly use this momentum, as Indonesia and Malaysia are the two big players of palm oil exports in the world.”

Malaysian Prime Minister Mahathir Mohamad ruffled feathers in New Delhi last month after he said while addressing the United Nations General Assembly that India had “invaded and occupied” Kashmir. Mahathir’s comments prompted calls in India for a boycott of Malaysian products, including palm oil, with social media users in India are coming up with the #BoycottMalaysia hashtag in their angry postings.

Last week, a major Indian vegetable oil trade body called on its members to avoid buying palm oil from Malaysia, noting the government was mulling retaliatory measures.

India is among the largest buyer of Indonesian palm oil and Indonesia is keen to further boost its export of the commodity there. But despite the opportunity presented by looming lower Indian intake of Malaysian palm oil, the Indonesian palm oil sector remained non-committal.

Chairman of the Indonesian Association of Palm Oil Producers (GAPKI) Joko Supriyono, speaking during a press conference last week, declined to comment on the matter. Joko just dismissed the India-Malaysian spat as “just an excess,” and added that he believed India would continue to remain open to business with both Indonesia and Malaysia. With a population of 1,4 billion people, India he said, will continue to have “huge need and appetite for vegetable oils”.

“When I spoke to traders, they told me it is basically business as usual, because India is a huge market and I’m sure they’ll try to find the cheaper options for vegetable oils,” Joko said, adding that in meeting its need for vegetable oil, India will still compare palm oil with other vegetable oils. “Indonesia and Malaysia are still competing on that market share,” Joko added.

Indonesia is the world’s top palm oil producer, followed by Malaysia. Both countries account for about 85 percent of world palm oil supplies.

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