The export prospects for Malaysian palm oil in the second half of 2018 look positive, as the Primary Industries Ministry has set its eyes on wooing more buyers from China, the world’s second-largest economy and one of Malaysia’s top three palm oil consumers, says minister Teresa Kok Suh Sim.
Her mission, when she joins Prime Minister Dr Mahathir Mohamad on his official visit to China later this month, would be to persuade China to increase its offtake of Malaysian palm oil for the manufacturing of food products and to lure them to the Malaysian shores to establish palm oil-related businesses.
Last year, China imported 1.92 million tonnes of palm oil, behind India which imported 2.03 million tonnes, and the European Union with 1.99 million tonnes.
Cumulatively, these three countries accounted for almost 36 per cent of Malaysia’s total palm oil exports in 2017 of 16.559 tonnes, valued at RM50 billion.
Total exports of oil palm products last year stood at 23.974 million tonnes, worth RM74.738 billion, versus 23.294 tonnes in 2016 valued at RM64.591 billion, according to statistics published by the Malaysian Palm Oil Board.
Kok is bent on inviting Chinese investors to partake actively in manufacturing palm oil-based products in Malaysia itself and then export the products back to China.
“Prior to our bilateral visit, later this month, I actually went to China, on a private visit, and met some representatives from government-linked companies and government agencies there,” she said, adding that there was an overwhelming response from investors expressing interest to come to Malaysia and do business.
Kok, however, feared that there may be insufficient supply of the edible oil from the industry, especially from the smallholders sector.
“Sometimes our problem is the quantity we supply which is not adequate to meet the demand from big companies. But, if we are able to tackle this (insufficient supply), palm oil prices in the second half of 2018 can recover significantly,” said Kok.
The physical price for crude palm oil, as of August 3, stood at RM2,190 per tonne.
As of end-June 2018, the palm oil inventory has increased 43 per cent to 2.19 million tonnes from the same period a year ago with exports stagnant at 1.13 million tonnes.
Making M'sia an investment destination
She further explained that it was not only important to get Chinese investors to come here, but consistently follow up with them on making Malaysia their investment destination.
“This is what we are focusing on right now. My ministry is working on some Memorandum of Understandings and we hope to even seal some agreements during the forthcoming visit.
“If we can convince them, during the upcoming trade mission, the prospects for the second half not only look good but we can improve our palm oil exports to China,” she said, adding that besides the republic, other markets on the ministry’s radar included the African continent, the Philippines, Iran and India.
Asked on the smear campaigns by the EU against Malaysian palm-based biodiesel, Kok said she would address the issue during her visit to the region in October.
Without divulging details, the Seputeh MP said under her leadership, the ministry would also go all out to tap the social media platform to spread 'the love' for palm oil.
“I remember clearly, this campaign is not new… the late plantation industries and commodities Minister Lim Keng Yaik also faced similar challenges and he always 'hantam' or 'whack' the EU for spreading 'half-baked truths' about Malaysia’s palm oil and timber industry,” she quipped.
The anti-palm campaign hurled against Malaysian palm oil was first mounted by American soybean farmers in 1986 as they were facing a bleak future as palm oil, the closest substitute to soybean oil, was fast dominating the American edible oil market.
Malaysian palm oil, rich in nutritional value, was also sold at a discount to soybean oil in the American market, which irked Lim, but the American food, confectionery and soap making industries found it cheaper and better to use Malaysian palm oil in their products for taste and quality.
Kok said soya bean producing companies in the EU spent a whopping US$600 million last year to launch the anti-palm oil campaign but Malaysia only spent a meagre RM2 million “to tell the truth about palm oil”.
She added that in countering the issue, Malaysians, at large, should join the relevant authorities in fighting the ban against the use of palm oil in the EU.
At the same time, the government, she said, would push for smallholders to adhere to the Malaysian Sustainable Palm Oil (MSPO) standards and make it mandatory for them to comply with the requirement by Dec 31, 2019.