The issuance period for certificates of origin for Malaysian condensate has been significantly reduced from approximately six months to just one and a half months. This change is expected to alleviate the financial burden on domestic petrochemical companies, allowing them to receive refunds on duties paid four months earlier than before.
On August 25, the Korea Customs Service held a meeting at the Seoul Customs office with representatives from Hanwha TotalEnergies, SK Incheon Petrochemicals, HD Hyundai Chemical, the Korea Chemical Industry Association, and the Malaysian Embassy in South Korea to discuss improvements in the certificate issuance process.
Condensate, a type of ultra-light crude oil produced from gas fields, is a key raw material for producing petrochemical products like naphtha. Over the past two years, the average time to obtain a certificate of origin for Malaysian condensate was 184 days, significantly longer than for Indonesian (84 days), American (72 days), and Australian (56 days) condensate.
The delays were attributed to the complex three-party transaction structure involving South Korean importers, Singaporean brokers, and Malaysian exporters. Additionally, the nature of crude oil transactions, where final prices are determined about a month after import, contributed to the delays.
As a result, domestic companies had to pay duties upfront without being able to submit the certificate of origin, and then apply for refunds under the Korea-ASEAN Free Trade Agreement (FTA) months later.
Since April, the Korea Customs Service has conducted 15 working-level discussions with the Malaysian Ministry of International Trade and Industry (MITI) and held six improvement meetings with domestic importers. They also secured cooperation from Malaysia's state-owned energy company Petronas to expedite the application process for certificates of origin from local producers and exporters.
Furthermore, domestic companies are now required to request the issuance of certificates immediately upon product import and can make necessary corrections only to essential information. They have also improved their internal procedures to quickly respond to draft certificates.
As a result, the issuance period for certificates of origin has been shortened from 184 days to 45 days, a reduction of 139 days, or about 76%. This allows companies to recover duty refunds sooner and finalize their raw material supply schedules in advance.
This move is seen as an extension of efforts to diversify supply chains beyond the Middle East, especially as uncertainties rise due to conflicts in the region. Previously, the Korea Customs Service simplified the certificate verification process for Canadian crude oil to reduce reliance on Middle Eastern imports.
Han Min, Director of the International Customs Cooperation Bureau at the Korea Customs Service, stated, "Given the instability in the Middle East and concerns over the closure of the Strait of Hormuz, ensuring stable crude oil supply and diversifying supply chains is crucial. We will proactively address trade barriers that hinder companies' use of FTAs."
* This article has been translated by AI.
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