Malaysia keen on exploring new markets while expanding existing ones

Malaysia is stepping up its effort to explore new markets for palm oil, targeting Africa, the Middle East, Central Asia and South Asia.

Africa

Primary Industries Minister Teresa Kok has singled out Egypt and Morocco as the gateways to Northern African, Europe and Central Africa, having shown their keen interest to import Malaysian palm oil.

“Indirectly, we can also penetrate new markets such as Tunisia and Libya through Morocco,” she told Dewan Rakyat, hinting that more potential markets are on the cards, including Ethiopia.

“The Ministry also sees a big opportunity in Benin, which imported 240,000 tonnes of palm oil from Malaysia last year,” she added, citing that the Malaysian Palm Oil Council (MPOC) has been exploring new export markets since the beginning of 2019.

In January 2019, Malaysian palm exports to Sub-Saharan African countries were recorded at 215,672 tonnes, an increase by 57,028 tonnes or 36% as compared with that of January 2018. The increase was mainly attributed to high imports from Nigeria, Mozambique and South Africa. Despite foreign exchange restriction imposed by Nigerian government, palm oil import by Nigeria increased by 155% mostly in the form of crude palm olein and crude palm oil.

Africa is the world’s second most populous continent with over 1.3 billion people and Malaysian palm oil exporters should tap into it seriously, reminds founder and director of Global Farm Trade, Sandeep Singh.

The Middle East

The Malaysian government has also identified Saudi Arabia as one of the two countries (the other being Ethiopia) among its initial targets of new palm oil markets as a long-term move to promote the country’s commodities.

A five-day (22 – 26 April 2019) Palm Oil Economic Mission to Saudi Arabia led by Deputy Primary Industries Minister Datuk Seri Shamsul Iskandar Mohd Akin, in conjunction with the Palm Oil Trade Fair & Seminar (POTS) held in Jeddah is one of the key initiatives to boost the palm oil trade. 

In 2018, Malaysia exported 371,380 tonnes of palm oil to Saudi Arabia. Saudi Arabia is the second largest Middle Eastern trading partner for Malaysia after United Arab Emirates (UAE).

At the same time, Malaysia is adding more momentum to the palm oil trade by expanding existing markets within the same region especially Turkey. The Free Trade Agreement between Malaysia and Turkey shows very encouraging results as exports of palm oil and palm-based products increased 5.7 percent to 975,960 tonnes last year from 922,690 tonnes in 2017.

Central Asia

For Central Asia, countries such as Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan have started importing Malaysian palm oil products, according to Kok.

Take Uzbekistan as an example. Malaysia accounted for 84.29% of the market share of Uzbekistan’s palm oil imports by country for 2017. Palm oil, which is currently Uzbekistan’s second largest import, is fast becoming a key ingredient in the confectionery and food industries of this landlocked country. It is worth noting that Uzbekistan is Central Asia’s biggest economy and a trade hub for the region.

Malaysia exported 30,093 tonnes of palm oil to Uzbekistan last year, followed by 23,756 tonnes to Kazakhstan, 2,150 tonnes to Kyrgyzstan, and 1,192 tonnes to Tajikistan.

Uzbekistan and Kazakhstan are the top two largest trading partners for Malaysia in the Commonwealth of Independent States (CIS) region.

South Asia

In addition to India, the world's biggest importer of edible oils, Sri Lanka is another high-potential market to explore and expand especially in the food, and oil and fats industries.

Malaysia is the 6th largest trading partner for Sri Lanka and the two nations are currently exploring a Free Trade Agreement (FTA) to expand their bilateral trade. Malaysia has so far signed 7 bilateral FTAs with Japan, Pakistan, India, New Zealand, Chile, Australia and Turkey.

Malaysia exported 213,309 tonnes of palm oil to Sri Lanka in 2018 where palm oil and petroleum are two of the main imports from Malaysia. 

Malaysia also exported 2,514,008 and 1,161,278 tonnes of palm oil to India and Pakistan respectively last year. Pakistan is another key market for Malaysian palm oil where both nations have a long-standing palm oil trade relationships of more than 40 years already.

MPOB and MPOC

Two purpose-built government agencies - the Malaysian Palm Oil Board (MPOB) and Malaysian Palm Oil Council (MPOC) - have offices abroad to look after foreign countries’ demand for the commodity, assured Datuk Dr Kalyana Sundram, chief executive officer of MPOC.

The overseas network includes offices in Accra, the capital of Ghana, to look after all the South African countries; in Brussels for all the European countries; and in Moscow, which takes care of Russia and Eastern European countries.

“This effort (actively exploring new markets and expanding existing ones) is important to ensure that the country's palm oil stockpile is at a healthy level of about two million tonnes (yearly), which is not only able to cater for external demand and supply but also the country’s needs," Kalyana remarked.