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Last Updated: 20 June 2024

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Malaysia’s palm oil industry is hoping to get a fresh kick from China’s insatiable appetite for mala hotpot as the world’s second-largest producer of the vegetable oil looks to diversify markets for a sector that faces possible sanctions under deforestation rules imposed by the European Union.

On Wednesday, during Chinese Premier Li Qiang’s first official visit to Malaysia to coincide with the 50th anniversary of diplomatic ties, the two countries renewed a five-year economic and trade pact and expanded cooperation across sectors such as green technology and cross-border crime.

China is the second-largest importer of Malaysian palm oil, buying last year nearly 3.1 million tonnes of the controversial commodity that environmental groups have said is responsible for mass deforestation and the destruction of the habitat of critically endangered animals such as the orangutan.

But Malaysia thinks there is plenty more room to grow demand in China, which counted nearly 400,000 restaurants across the country that specialise in Sichuan hotpot in 2021, according to the official data.

The government has cooked up a plan to convince the hundreds of thousands of hotpot operators in China to consider palm oil as an alternative base for the tongue-numbing broth, which is often made from beef tallow and can be so spicy that some versions purportedly cause hallucinations.

“Palm oil is not only abundant but also versatile and stable under high heat, which is ideal for the intense cooking process of mala hotpot,” Malaysia’s Plantation and Commodities Deputy Minister Chan Foong Hin told This Week in Asia.

Chan said the government had already set up partnerships with Chinese enterprises in a bid to embed palm oil as deeply as possible in the hotpot industry supply chain, while actively promoting the benefits of using palm oil in China’s culinary traditions.

“The feedback so far has been very positive, indicating a strong potential for growth in this market segment,” he said.

Malaysia’s hotpot push began last year, when domestic restaurant operators and commercial producers of the mala hotpot soup base sought alternative fats to offset a shortage in beef tallow, which is traditionally used due to its flavour and texture.

The shift coincided with complaints filed to the World Trade Organization by Malaysia and Indonesia, the world’s largest producer of palm oil, against the EU’s deforestation regulation that the two nations said placed unfair restrictions on palm oil in favour of vegetable oils grown in Europe.

The WTO in March ruled in favour of the EU’s move to exclude palm oil as a renewable source of biofuel by 2030 under its deforestation regulation, which was formally adopted in 2021 to drop imports of crops grown on deforested land or where there is a high risk they would displace food crops.

Once in full effect, the EU’s regulation would ban the import of vegetable oils deemed to have contributed to recent deforestation. Malaysia and Indonesia have said that it places unreasonable requirements on smallholders, who can ill afford to implement technology such as GPS tracing on their produce.

Malaysia has argued that it no longer allows land clearing or deforestation to expand oil palm plantations in the country.

In 2015, it launched its Malaysian Sustainable Palm Oil (MSPO) certification to promote sustainable practices in the industry and counter the deforestation narrative that has been a common thread in diplomatic and public discussions in Europe.

The EU remains a major market for Malaysian palm oil and palm oil products.

The region imported nearly 2.8 million tonnes in 2023, but demand has seen a steady decline as EU member states face sustained public resistance to the ubiquitous oil, used in everything from making lipsticks and soaps to pastries and the popular Nutella spread.

Malaysia was actively promoting the use of MSPO-certified palm oil and palm oil products to China, deputy minister Chan said, adding that the now-mandatory certification for Malaysian-produced palm oil showed “Malaysia’s commitment to sustainable palm oil production”.

“China has shown a positive view of MSPO and is accepting imports of MSPO-certified products. More Chinese companies are expected to import MSPO-certified palm oil products in the future,” he said.

https://www.scmp.com/week-asia/politics/article/3267184/malaysia-banks-chinas-love-mala-hotpot-spice-palm-oil-exports

Sumber : South China Morning Post

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Last Updated: 18 June 2024

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KUALA LUMPUR: The slowdown in palm oil production may lead to a decline in inventory levels and positively impact global crude palm oil (CPO) price in the second half of the year, said analysts. 

According to the Malaysian Palm Oil Council (MPOC), CPO price will likely stabilise at RM3,900 per tonne this month. 

It said this was due to the expected drop in supply from Indonesia and Malaysia — the world's top two producers — in the second half of the year, coupled with an increase in exports.

However, it stressed that the anticipated price increase might hover around RM4,150 due to the United States' Agriculture Department (USDA) forecast of a surplus in oilseed production this year and in 2025.

"From January to May, Malaysia's CPO production increased by nine per cent year-on-year, or 626,000 tonnes, while exports rose seven per cent, or 393,000 tonnes," said MPOC.

By comparison, according to Indonesian Palm Oil Association (GAPKI) data. the country's CPO production fell by five per cent, or 647,000 tonnes, in the first quarter of the year.

Tradeview Capital Sdn Bhd fund manager Neoh Jia Man said the anticipated rise in exports indicated strong demand for palm oil, which was bullish for CPO price.

"We believe that stakeholders who consume a material amount of palm oil would seek to maintain an adequate inventory level and take advantage of the recent pullback in price to increase their stockpile.

"In addition, they could seek to diversify the supply sources or explore alternative vegetable oils," he added.

Neoh said the decline in Indonesia's CPO output was likely due to the El Nino phenomenon.

"It will have a material impact on global palm oil supply and coupled with the anticipated drop in output from Malaysia, we see upward pressure on global pricing." 

Meanwhile, MPOC observed that in the European market, the prices of rapeseed oil, sunflower oil, and soyabean oil increased by six, eight and seven per cent, respectively, in May, while CPO price fell by four per cent.

"As a result, the price premium of soft oils over palm oil increased from US$40 to US$115, which is expected to support the ongoing recovery of Malaysian palm oil exports," it noted.

Commenting on this, Neoh said the increased production and stockpile of oilseeds resulted in a greater availability of alternative vegetable oils.

"This will serve to cap the potential upside of CPO price as buyers could be encouraged to switch to cheaper alternatives.

"The broader availability of those alternative oilseeds will also temper the urgency by buyers to stockpile palm oil," he added.

https://www.nst.com.my/business/economy/2024/06/1063826/cpo-price-boost

Sumber : New Straits Times

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Last Updated: 18 June 2024

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KUALA LUMPUR: Malaysian palm oil leaders are welcomed to establish a hub in the Suez Canal Economic Zone to tap on the free trade agreements that Egypt has signed with its neighbours, Egyptian ambassador to Malaysia Ragai Tawfik Said Nasr said.

The Egyptian government has invited the Malaysian government and private sector to create a hub where the crude palm oil will be refined and distributed in Egypt and its neighbouring countries, he added.

Ragai Tawfik said the trade and investment between Malaysian businesses and counterparts in the Middle East, including South Africa will be facilitated by the strong network of FTAs that Egypt has signed with almost all of its neighbouring countries.

The FTAs include Greater Arab Free Trade Area (GAFTA), Egypt-Europe Union Free Trade Agreement, Common Market for Eastern and Southern Africa (Comesa) and African Continental Free Trade Area.

"This also includes the plan to serve the food industries in the SCZone that are dependent on palm oil as a manufacturing input. We had a long discussion with the Malaysian stakeholders, and we arranged site visits for a number of government officials and business leaders.

"We are hopeful that these efforts will succeed in the near future specially after the recent visit of Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani to Egypt," Ragai Tawfik told Business Times in an exclusive interview.

In his visit to Egypt, Johari highlighted that Egypt can be the North African gateway for Malaysia to offer significant opportunities for creating higher-value products from palm derivatives in sectors such as pharmaceuticals, cosmetics, processed foods, personal care and consumer brands.

According to Malaysian Palm Oil Council (MPOC), Malaysian palm oil accounted for 51.9 per cent of the Egypt's imports as of January 2024, surpassing Indonesian imports at 48.1 per cent.

Given these factors, MPOC believed Malaysian palm oil exports are positioned to maintain their robust performance throughout 2024.

On the efforts to strengthen bilateral trade and investment ties with Malaysia, Ragai Tawfik said Egypt had organised a number of successful online events that highlighted the business opportunities it offer to overcome the the lack of regular physical meetings between business people from both countries.

"(We also) raised awareness of the incentives that the Egyptian government is granting for the investors specially within the Suez Canal Economic Zone to many Malaysian companies," he added.

Beyond palm oil business, he pointed out that automotive, green energy, information and communication technology (ICT) industries could potentially enhanced the trade relations between both countries.

"We see Malaysia as an inspiring economic and industrial model. We aim to develop a stronger strategic partnership, especially in areas such as the advanced technology manufacturing and the Industry 4.0 applications in the manufacturing sector as well as data centres and ICT sectors," he said.

According to Ragai Tawfik, Malaysian carmaker Proton Holdings Bhd is currently involved in supplying the parts and technical support needed to its business partners in Egypt to begin assembling Proton Saga there by September this year.

"In the ICT sector, we would like to position Egypt as a hub for data centers and cloud computing in the Middle East, North Africa (MENA) region. Malaysia has recently succeeded to attract the giants like Google to build data centres and we learnt that Microsoft also are attracted to work in the country.

"As for green energy, the focus is to attract wind and solar power companies to work in Egypt as this sector is well-established and receives Egyptian government support, plus we already enjoy the strong natural sun and wind sources of power," he said.

Ragai Tawfik also emphasised the urgent need to reactivate the Egypt and Malaysia business council where Malaysia need to appoint a chairman.

He stated that such move will enable the business council to play its pivotal role in proposing initiatives that can enhance trade and investment between the two countries.

"We are looking forward to attract attention of the business community in both countries to the non-traditional business cooperation and opportunities which includes joint ventures and long-term business plans," he added.

https://www.nst.com.my/business/corporate/2024/06/1064575/invitation-set-palm-oil-hub

Sumber : New Straits Times

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Last Updated: 18 June 2024

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KOTA KINABALU: Sabah-owned Sawit Kinabalu, through its subsidiary Kunak Lipids Sdn Bhd, is poised to revolutionise tocotrienols production as Malaysia’s first company to extract it from palm oil waste on a large scale.

This large-scale production is expected to commence in the first quarter of 2025 and is aligned with the government’s vision to foster economic and environmental sustainability in Sabah.

Kunak Lipids employs proprietary technology and high-precision equipment to capture tocotrienols from refined byproducts, reducing environmental waste and creating wealth, thereby contributing to the state’s economic and environmental goals.

Tocotrienols, a form of vitamin E, is used for a variety of health and therapeutic purposes due to its potent antioxidant properties.

Recognising the high demand for tocotrienols in China, Kunak Lipids, with support from the Malaysian Palm Oil Board (MPOB) and Palm Oil Research and Technical Services Institute Malaysia, identified significant market potential during initial marketing explorations.

Cosmetics manufacturers, in particular, are keen to obtain tocotrienols for their products.

Recently, Sawit Kinabalu, through Kinak Lipids, signed a memorandum of understanding with a Shanghai-based trading company, Boce Trade Service Company Ltd, to produce palm oil refinery byproducts and meet the Chinese market demand.

At the signing, Kunak Lipids was represented by its group managing director and chief executive officer Victor Ationg and Boce Trade Service Company Ltd by its general manager Qiu Rong Yu.

The ceremony was witnessed by Deputy Plantations and Commodities Minister Datuk Chan Foong Hin at Shangri-la Pudong Shanghai on June 13.

https://www.thestar.com.my/news/nation/2024/06/16/sawit-kinabalu-pioneers-large-scale-tocotrienols-production

Sumber : The Star