MOSCOW:  Malaysia aims to increase its palm oil import market share in Russia from the current 14% to 25% in the near term as it has been identified as a major consumer of oils and fats.

Plantation Industries and Commodities Minister Datuk Seri Douglas Uggah Embas said the focus will be on the food industry, oleochemicals and biodiesel as well as on increasing Malaysia’s participation in the blended oil market segment in Russia.

“This includes promotion of Novelin [a blended cooking oil for the Russian market]. Similarly, the potential of palm oil in oleochemicals for application in household and toiletry products as well as the prospects of palm kernel cake application in animal feed in Russia will also be highlighted,” he told reporters after launching the Palm Oil Trade Fair and Seminar (POTS) organised by the Malaysian Palm Oil Council (MPOC).

Uggah said Malaysia can expect Russia to import more palm oil with demand for oils and fats set to increase. Russia’s domestic production of oils and fats is insufficient to meet the demand of its 143 million people.

Palm oil imports by Russia have increased from an average of 150,000 tonnes annually to 626,000 tonnes in 2012, with Malaysia supplying 14% of the total imports. Palm oil currently accounts for 69% of the total oils and fats imported by Russia, and is the second most popular vegetable oil consumed in the country after sunflower oil.

“We believe there is more room for improvement for palm oil in the Russian market, especially considering the high amount of trans fats consumed by Russians. It is only logical for them to switch to palm oil which is healthier and, more importantly, free from trans fats,” Uggah said.

To increase its market share, he said, Malaysia has come up with plans to renew and broaden contacts as well as foster better understanding with buyers, manufacturers and end-users in Russia.

In addition, there are plans to use Russia as a hub to export Malaysian palm oil to the Commonwealth of Independent States, which were formerly part of the Soviet Union.

Uggah said Malaysia is talking to oils and fats importers in Russia to persuade them to convince their respective authorities to reduce the import duty on palm oil which is currently capped at 5% or a floor price of €120 (RM519) per tonne.

Malaysia is hoping that Russia will reduce barriers on palm oil  imports as the latter has maintained minimum import duties on palm oil, palm kernel oil, coconut oil and some hydrogenated vegetable fats and oils after it joined the World Trade Organisation (WTO).

“When the CPO price is dropped, the 5% duty will be higher because there is this so-called fixed floor pricing of €120 per tonne. That is why we are interested to hold a dialogue with the Russian stakeholders, including oils and fat players,” Uggah said.

Russia, within the WTO framework, agreed on a maximum import duty on refined palm oil of 5% in 2012. Based on a price of €1,000 per tonne, import duties on refined palm oil based on the WTO accords would be capped at €50, but Russia’s minimum duty of 12 US cents a kilogramme equates to €120 a tonne, which is twice as much. — Bernama

This article first appeared in The Edge Financial Daily, on September 18, 2013.