Nominal impact on India's import of Malaysian palm oil even if duty increases — IJM
PETALING JAYA (Aug 27): Malaysian refined palm oil export into India will only be impacted nominally even if the Indian Government decides to hike the import duty on the commodity, IJM Plantations Bhd said.
Chief financial officer and executive director Puru Kumaran said Indian consumers would continue to buy the vegetable oil for the upcoming festive season and their daily intake; hence the demand would not shrink.
"It is only about timing. India will continue to buy the oil until September this year for Deepavali and their next purchase will come next year in January for Hari Raya Aidilfitri," he told reporters after the company's annual general meeting here today.
The demand will only reduce if India's oilseed production was high, but currently their crop is not doing well, he explained.
Currently, India imposes a 40 percent import tax on crude palm oil (CPO) and 50 percent on refined palm oil.
However, Malaysia, under an agreement with India, has an advantage of being imposed an import tax of only 45 percent on refined palm oil and this helped increase palm oil imports by India between January and July 2019.
Meanwhile, chief executive officer Joseph Tek Choon Yee said IJM Plantations was not looking to buy new land but will reserve cash to weather the storm faced by the plantation industry.
"We are in a consolidation mode and we are monitoring our operation to improve its standard operating procedure to ensure high quality products.
"We hope production will cross the one million-tonne mark for financial year 2020 from the 976,000 tonnes recorded for financial year 2019," he said, adding that the group was hopeful that CPO prices would hover between RM2,100 and RM2,200 per tonne this year.
The group was in the red during the financial year ended March 31, 2019, with a net loss of RM36.34 million versus a net profit of RM27.86 million while revenue declined to RM630.90 million from RM747.22 million previously due to the lower CPO and crude palm kernel oil prices.
Its Indonesian operations oversee 35,852 hectares of planted areas, while its Malaysian operations, centred in Sabah, have 24,781 hectares.