Updates and Outlook on Palm Oil in Iranian Oils and Fats Market
66
VIEWS
by Nur Adibah Mohd Razali
After a decade of unprecedented economic sanctions, Iran is about to be back in business. The international community has declared that Tehran has fulfilled its obligations on, triggering dismantling of network of punitive measures and normalization of Iran’s relations with the West after sanctions and separation from international markets. Now Iran offers huge potential in oils and fats investment following the termination of the economic sanctions. A general agreement has been reached on the nuclear issue between Iran and the P5+1 (US, UK, France, China, Russia and Germany), and international investors are ready to re-enter this country market. The signing of Joint Comprehensive Plan of Action (JCPOA) in July 2015 and its implementation in January 2016 has fueled increased interest in Iran from potential foreign investors.



Iran qualifies from many aspects to be a good location for investments especially in oils and fats. With an excellent geographical location, sandwiched between Europe, Russia, the booming markets of the Gulf, and close enough to Asia, makes Iran a natural strategic access to neighboring markets comprising of 350 million inhabitants. The country itself provides a vast domestic market for oils and fats industry, with a population of 79 million. Palm oil is one of the most consumed and imported oils in Iran and they have always been one of the largest importers of Malaysian palm oil within the Middle East region. Post sanctions, doing business with Iran is more transparent and easier. Malaysian palm oil industry players should take advantage of these opportunities to further expand into the market.



In addition, Iran no longer enforces the palm oil import quota which was previously enforced by the Iranian Ministry of Health which decreed that total import of palm oil must not exceed 30% over the total import of oils and fats. The quota was implemented since October 2014 but due to pressure from the mounting local demand for palm oil, it was fully lifted beginning April 2016. The local price of palm oil in Iranian market is the lowest compared to other oils, especially soybean oil. Even though import tariff for palm oil is raised to 40% replacing previous tax of 10% starting April 2016, palm oil prices still have the advantage of being the most economical edible oil for Iranian consumers. This presentation will further explain the recent updates and outlook in Iranian oils and fats market.

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