KARACHI: The Chairman Pakistan Vanaspati Manufacturers Association (PVMA) Sheikh Umer Rehan has called on the government to take urgent measures to address the challenges in the edible oil supply chain by reducing duties on alternative oils like soybean, canola, and sunflower oil.
This proposal aims to diversify imports and reduce Pakistan’s heavy reliance on palm oil, which constitutes a significant part of the country’s vegetable oil consumption.
PVMA Chairman Sheikh Umer Rehan highlighted the looming global palm oil shortage caused by Indonesia’s bio-diesel policies. Indonesia, which supplies 90% of Pakistan’s palm oil imports, plans to increase the blending ofp palm oil in bio-diesel to 40% by January 2025 and 50% by January 2026.
This shift, along with past export bans imposed by Indonesia due to rising domestic prices, has raised concerns about the stability of Pakistan’s supply chain. Pakistan, as the world’s third-largest importer of palm oil with an annual import volume of 3.5 million tons, has faced significant challenges when such restrictions were previously imposed.
In light of these developments, Sheikh Umer Rehan urged the government to negotiate consistent supply commitments under Pakistan’s Preferential Trade Agreement (PTA) with Indonesia. He also suggested initiating discussions with Thailand, an emerging palm oil producer, to explore a new PTA, while maximizing opportunities under the Free Trade Agreement (FTA) with Malaysia.
Additionally, Sheikh Umer Rehan pointed out that soybean and canola oils are currently cheaper than palm oil globally but remain underutilized due to high regulatory duties. He emphasized the need for a flexible duty structure that aligns with global edible oil price trends, enabling Pakistan to capitalize on lower-cost alternatives. Reducing duties on these oils would not only ensure a stable supply but also ease pressure on Pakistan’s foreign exchange reserves and local prices.
The PVMA chairman urged the government to collaborate with industry stakeholders to monitor global price trends and adjust regulatory duties accordingly. He warned that failure to act swiftly could lead to economic strain, rising local prices, and further dependency on volatile palm oil supplies.
Copyright Business Recorder, 2024