Malaysia’s Palm Oil Export to India

Abstract

India is the second-most populous country after China, with an overall population exceeding 1.3 billion. India is the fifth country in the world with the highest import and consumption of world oils and fats. Palm oil has become the main of oil and fats product that is being imported and consumed in India market. India is the major of Malaysia’s palm oil export destination. Malaysia’s palm oil exports to India market continually increases since the last ten years with an average of more than 2 million tonnes a year. This study attempts to analyse factors that influence the export demand of Malaysia’s palm oil to India market. The study applies the ARDL approach for data from the period 1975 – 2018. The study indicates that there are relationships between variables in the short run and long run for the demand of palm oil exports by India. The most significant determinant is attributed to soya bean prices (LPSBR) and population (LPOPI) in both short-run and long run. The export price of palm oil by Indonesia (LCPOPXIR) indicates a positive and significant relationship as Malaysia and Indonesia are competing to penetrate to India market in the long run. However, Malaysia’s export price of palm oil has a negative relationship but insignificant. Thus, the findings suggest for non-price strategies in order to increase exports to India market. Non-price strategies such as an increase of quality and the differentiation of product as well as trade deals are the strategies to increase competitiveness and preferences of Malaysia’s palm oil in India market.