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Joint venture with Malaysia resented.

Vice Chairman of the Pakistan Vanaspati Manufacturers Association, Khawja Arif Qasim slated the manner in which a joint venture protocol in edible oil sector was being arranged with Malaysia. Under this protocol, a proposal is being worked out to create a huge 3,000 tons-a-day refining facility of crude palm oil with the refiners of Malaysia, allowing the joint venture-a full package of tax exemptions.

He said that if the proposal was made effective it would mean virtual death to the country's vegetable ghee and cooking oil industry because the proposed refinery would turn out one million tons of refined edible oil: ready for marketing anywhere in Pakistan where the 40 per cent market was already under the control of direct filters of the RBD palm oil and this quantity was the total requirement of the country.

Dealing with the injurious side effects of the proposal, he said it was a plan for total dependency on foreign imports of a very sensitive consumers item. It is a mystery as to how this plan was brought on the anvil without taking the national point of view into consideration. He disclosed that the PVMA had already expressed its apprehensions in letter written to the Ministry of Industries Islamabad. He pointed out that edible oil Industry in Pakistan was of a medium volume industry with each unit having 30 to one hundred tons per day production capacity.

He added that the government's move would throw Pakistani investors out of their own markets and nearly 12 billions of rupees invested in the industry would be lost. The architects of this proposal Khawaja said must keep in mind that there would also be a loss of at least 50,000 jobs with a boomerang of serious political overtons.

According to him the PVMA has enumerated the six hard hit areas which include, apart from the loss to edible oil and banking industry, oil seed production sector, unemployment of work force of thousands - employed by the industry and also the liquidation of medium engineering and fabrication industry which now provide various maintenance services to existing edible oil units. He remarked that while there was a lot of noise for the development of our own oil seed potential, as there was an annual 10 per cent increase of demand in this sector and there was also an ever increasing demand on our foreign exchange resources. Whereas, he regretted that this proposal tantamount to subsidize the Malaysian Palm Oil Growers.

Spotlighting other economic effects, Khawja said that the country was facing ever widening trade deficit with Malaysia. He said that trade deficit in 87-88 was Rs. 3.5 billion and in 90-91 the deficit jumped upto nearly 6 billion rupees. To off-set this imbalance he has suggested the government to invite the Malaysians for joint ventures in Oleo Chemical Industry, Activated earth, Filter Cloth, Rubber both synthetic and natural, Tin, Zinc and aluminium sheet manufacturing industry. He appealed the government to avoid any joint venture inheriting the neo-colonial character and instead it should be based on bilateral interests.
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Title Annotation:edible oil industry
Publication:Economic Review
Date:Oct 1, 1992
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