KUALA LUMPUR: Malaysia’s current healthy export momentum to India may be significantly dampened, if there are restrictions against the import of palm oil-related products by that country,
according to Ram Ratings.
This is because palm oil is the biggest contributor to the overall rise in import demand by India from Malaysia this year.
“The export of palm oil to India jumped almost 70 percent in the eight months of 2019, with a positive contribution of 11.0 percentage points.
“Malaysia’s palm oil-related sector is also particularly vulnerable to trade measures by India given the significance of the latter as an export destination,” it said in a statement.
The rating agency noted that the palm oil sector, along with the metals industry, stands to lose the most as exports destined for India comprised a respective 10.4 percent and 10.8 percent of these sectors’ total exports in 2018.
On that note, RAM Ratings expects Malaysia’s exports to decline 0.6 percent in September (August: -0.8 percent). Similarly, imports are envisaged to post a 0.4 percent contraction, albeit still a notable recovery after the steep 12.5 percent dive in August. This will bring Malaysia’s overall trade surplus to RM15.3 billion at month-end.
Reuters recently reported that the Indian government may consider imposing trade curbs on Malaysia’s goods following the speech by Malaysia Prime Minister Tun Dr Mahathir Mohamad at recent the United Nations General Assembly. – Bernama
