Razak urged to invite Malaysian ministers: Call to enhance import of palm oil from Malaysia to boost Pak exports

KARACHI: Chairman Pak-Malaysia Business Council of Federation of Pakistan Chambers of Commerce & Industry ( FPCCI) Bashir Janmohammed has urged Abdul Razzak Dawood, Adviser to Prime Minister for Commerce, Textile and Investment, to invite the Malaysian concerned ministers including ministers for trade & primary industries to Pakistan, so as to deliberate on all the relevant areas to find ways and means to enhance import of palm oil from Malaysia and to boost Pakistan exports to Malaysia and promote bilateral trade between both the countries.

In a latter to the advisor, he said Pakistan is continuously facing trade deficit with Malaysia. Pakistan's Balance of Trade with Malaysia historically is in favour of Malaysia. Trade imbalance was about $1billion in the year 2017-18. There is need to address trade imbalance by diversifying trading products and taking other steps.

He invited his attention to some of the main areas which required his consideration, for the sake of furtherness of business relationship between Pakistan and Malaysia that include:-

1) Export of rice: Pakistan is the major producer and exporter of rice at competitive prices and during the year 2019-20, Pakistan exported 4.100 million tons of rice valuing $2.20 billion. There is need to increase the volume of export of Pakistani IRRI and Basmati rice to Malaysia, as volume of Malaysian import from Pakistan during the year 2019-20 was about 131,000 M Tons, as compared to Malaysian annual requirement of over 1,000,000 Tons. Malaysian government, mainly its importing agency BARNAS needs to be asked to increase import of Pakistani rice considerably, so as to ensure promotion of export of rice from Pakistan.

2) Export of Fruits/Fresh Vegetable:

i) Malaysia is a potential buyer of fresh fruits and vegetables, which Pakistan exports to Malaysia. Malaysia has imposed 5% & 7% duty on import of mangoes and mandarin (Kinoo) respectively. For the sake of promotion of exports of fruits, there is need to review/abolish Malaysian duty on fruits.

ii) There are cumbersome procedure in respect of packing and labelling and other requirements in respect of import of fruits and fresh vegetables in Malaysia. It is necessary that the procedure may be simplified.

iii) Import permit for each shipment (especially for mangoes) is mandatory in Malaysia, which may either be abolished or converted into one time permit for each season/year to simplify formalities.

iv) Another impediment in this regard is that there is no regular direct flight from Pakistan to Malaysia, which is also essential for transportation of fruits, vegetables and other perishable commodities, which also need consideration.

3) Import of Palm Oil: Trade between Pakistan and Malaysia has declined considerably as the Malaysian share in the import of Palm Oil to Pakistan has drastically decreased to 20%, owing to availability and price factors, whereas 80% is being imported from Indonesia

4) Wood Products of Fibreboards:

a) High Density Fibreboards (HDF)

(i) On import of this product (HS Code 411.9200) from Malaysia, Customs duty is 20% and for HDF intermediary is nature (HS Code 441192) it was reduced to 16% since 2013-14.

(ii) Under Pak-Sri Lanka FTA, there is ZERO duty for the same HS Code and so there is no benefit for its import from Malaysia. Therefore, uniformity is required by bringing the said item at ZERO percent duty to match with the Pak-Sri Lanka FTA.

(iii) Accordingly, due consideration for elimination of tariff rate to ZERO duty on HS Code 4411.9200 may please be accorded for achieving higher level trade liberalization and effective market access between Pakistan and Malaysia, which is the basic object and main spirit of FTA.

b) Medium Density Fibreboard (MDF)

i) MDF is mainly imported in Pakistan from a few countries like Malaysia, Thailand, Sri Lanka, China and Indonesia. Statutory rate of customs duty on this item is 11% and regulatory duty is 5 % and it is also subject to 2% additional customs duty.

II) However, under Pakistan-Sri Lanka FTA, import of MDF from Sri Lanka has been exempted from the whole of customs duty and therefore Sri Lankan raw MDF and value-added MDF enjoy clear cut advantage of 14.5 percent-15 percent in terms of duties and this makes imports of raw MDF HS Code 44ll.1200, 4411.1300 and 4411.I400 from Malaysia, uncompetitive.

iii) Pakistani importers of MDF have been deprived of level playing field, since they are at a disadvantageous position, while importing it from Malaysia, especially the commercial importers who have also to bear the burden of 1l%.

Customs duty plus 2% additional customs duty and 5% regulatory duty on their imports from Malaysia and in turn Malaysia is also losing market in Pakistan.

C) It is therefore concluded that whole of duty on import of high density fibreboards (HDF) & medium density fibreboards (MDF) from Malaysia may be exempted and kept at ZERO duty level, at par Sri Lanka in order to promote level-playing field to Pakistani importers.

5) Review of FTA: There are certain areas/issues regarding Free Trade Agreement (FTA) between Pakistan and Malaysia about duty and permit/quota and other anomalies, which are also needed to be resolved/removed through negotiations at the level of both the governments and in upcoming JRC meeting of MPCEPA, so as to further boost bilateral trade and economic ties for getting full advantage of FTA, which is still far from its potential.

6) Oil Palm Plantation in Pakistan: In context with promotion of local oilseed cultivation, Malaysian technical know-how about "Oil Palm plantation" in Pakistan is needed. In this regard, one of our joint venture partners, FELDA is assisting Dalda Foundation who has put up a pilot project for oil palm plantation in coastal area of Sindh.

Pakistan may emphasize Malaysia for the transfer of this technology to Pakistan under Joint Venture Agreement.

7) Joint Ventures with Malaysia:

i) There is huge potential for joint ventures and direct foreign investment in the various areas of Islamic finance, Halal Food Industries, energy, low cost housing, infrastructure development, telecommunications, education.

ii) Pakistan is an open economy with no restrictions where Malaysian firms and contractors can benefit from establishing businesses by availing investment friendly government policies in Pakistan.

iii) Pak-Malaysia Business Council and the undersigned, in personal capacity, are also endeavouring to encourage the Malaysian investment in Joint Ventures in Pakistan in various fields.

iv) Some of the sectors having potential for profitable Joint Ventures that could be considered, are:-Fruit processing/Juices Oil Palm Plantation, Palm Oil-Based Industry including Oleo-Chemicals, Energy Sector, Renewable/Alternate Energy, Power Generation, Infrastructure Development, including Road and Buildings Construction Sector/Low Cost Housing, Food & & Hotel Industry & Fruit Preservation and Processing Industry Information Technology & Education, Telecommunication & Electrical Appliances Golf Courses/ Recreational/Entertainment facilities/ Sea Resorts etc., Halal Food, Islamic Finance.

Copyright Business Recorder, 2020