Cut tariffs on palm oils before CECA deal : Malaysia

Written by ASHOK B SHARMA | New Delhi, November 26: | Updated: Nov 27 2007, 01:55am hrs
Ahead of the discussion on India-Malaysia Comprehensive Economic Cooperation, Malaysia has demanded that India should reduce its applied tariff on palm oil.

At present the applied tariff on palm oil in India is high. This is the product of our export interest. India needs to lower its applied tariff on palm oil, said the visiting Malaysian minister of international trade and industry, Dato Seri Rafidah Aziz said on Monday.

Malaysia exports about $ 7 billion palm oil annually. Its exports of palm oil to India in 2006 amounted to $ 245.35 million as against $ 274.35 million in 2005.

With a view to deal with the price situation in the country India had reduced its effective duty on crude palm oil to 40% that on refined palm oil to 50% and that on RBD palmolein to 54.08%.

On August 11, this year the two countries completed the joint feasibility study for a comprehensive economic cooperation agreement (CECA) which proposes to Malaysias export by 1.3 times to $ 11.85 billion and Indias export by 2.5 times to $ 4.63 billion by 2012.

In 2006 Malaysias exports grew by 29.52% to be at $5,120.55 million, while its imports from India grew by 21.11% to be at $1,331.51 million. In 2007 till August, Malaysias exports to India was $1,691.08 million while its imports from India was $1,178.46 million.

The Indian commerce minister, Kamal Nath, however said : The tariff structure on palm oil needs to be carefully worked out for the CECA. We do not want to imperil our oilseed growers. He said that the free trade agreement (FTA) with ASEAN would also be worked out within a couple of months.

Aziz is leading a 91-member official and business delegation to India and is slated to visit Mumbai and Chennai also.

Malaysias major exports to India also include crude petroleum, E&E products, chemical products. It major imports from India includes chemical products, metal products, live animal and meat, E&E products and iron and steel products.

In the context of Indias proposal for signing a FTA with ASEAN, Aziz said : Malaysia is a strategic gateway to the ASEAN free trade area of more than 567 million people and is a highly competitive regional manufacturing hub and a service and distribution centre.

India was Malaysias 9th largest global trading partner and the largest trading partner in South Asia, she said.

The Malaysian minister invited Indian companies to invest in her country. She said that India companies can look forward for investing in manufacturing and related sectors like medical device industry like cathethers, rubber gloves, syringes, needles, surgical instruments, blood transfusion sets, medical tubes and bags, diagnostic radiographic equipment, orthopaedic products, procedural kits and in pharmaceutical sector like biogenerics, diagnostics, vaccines, innovator drugs, active pharmaceutical ingredients, vaccines, inhalation products, novel delivery systems.

Aziz also appealed to the Indian industry to invest in service sector like construction industry, healthcare and biotechnology in food and agriculture, biopharmaceuticals and biodiagnostics.

She said that the joint CECA study has has recommended intra-industry trade in petroleum and gas, processed food, animal feed, petrochemical, oleochemicals and medicine. It has also recommended trade and investment cooperation in services like medical, healthcare, diagnostics, advertising, audio-visuals, education, IT and telecommunications, financial services, tourism and travel, transport, architectural, construction and engineering, human resources development, accounting and taxation

According to the joint CECA report, the potential areas for investment crossflows are construction, telecommunications, civil aviation, education, tourism, R&D, design and prototyping and regional distribution centres. The study also recommended that enterprises of both the countries should consider establishing joint ventures and co-marketing instead of competing in the global market.

The Malaysian minister said that her country continued to be an attractive destination for foreign direct investment (FDI) flows. Till December 2006, 81 projects with a total investment of $159.3 million from India have been implemented. In the current year till September, 2007 four projects have been approved with Indian investment totaling up to $ 497.1 million.

On being asked about the recent agitation by ethnic Indians in Malaysia asking for better living conditions and facilities, she said this is a political game played by the Opposition parties.