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Last Updated: 23 May 2022

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MEDIA STATEMENT
ECONOMIC MISSIONS TO EGYPT AND QATAR STRENGTHEN MALAYSIA
AGRICOMMODITY

1. Minister of Plantation Industries and Commodities Malaysia, YB Datuk Hajah Zuraida Kamaruddin, has concluded her Economic and Agricommodities Promotion Mission to Egypt and Qatar from 16 April 2020 to 20th April 2020. During the mission, she has taken the opportunity to meet up with her counterparts from both countries; chaired the Roundtable Meeting with Egyptian and Qataris Agricommodities Players, meeting up with the Local Investment Authorities, Academicians, and the Local Women Entrepreneurs and Diaspora.

2. Among the Ministers and foreign dignitaries who met up with YB Datuk, Zuraida Kamaruddin are H.E. Mrs. Navine Gamea- Ministry of Trade and Industry of Egypt; H.E. Minister Dr. Ali El Moselhy- Ministry of Supply and Internal Trade of Egypt; H.E. Dr. Abdullah Bin Abdulazizi Bin Turky Al Subaie- Ministry of Municipality, State of Qatar; H.E. Sheikh Mohammed bin Hamad bin Qassim Al-Abdullah Al-Thani- Minister of Commerce and Industry of Qatar; H.E. Dr. Sherif el Gabaly, member of Egyptian Parliament and Chairman of EgyptianMalaysian Business Council. She also had a meeting with Counselor Mohamed Abdel Wahab- CEO of General Investment and Free Zones of Egypt, and Professor Dr. Hanafy Hashim, Head of Food Science & Technology, as well as Professor Dr. Gamel Abdrabuh, Dean of Faculty of Agriculture, Universiti AlAzhar.

3. As part of MPIC’s initiatives in promoting Malaysian agricommodity products, the round table discussions will bridge the trade promotional activities, business cooperation, and information exchange between governments and key players from within the industry, particularly for palm oil, rubber, and timber products.

4. The palm oil price has been at the forefront of edible oil news since the pandemic started in 2020 and due to recent ongoing conflict in Europe. The current price surge is driven by the outlook for the supply of substitute vegetable oils due to uncertainty over sunflower seed oil from Ukraine and Russia. Tight supply from the producing countries has also impacted the global palm oil price.

5. Malaysian Palm Oil Board (MPOB) anticipated crude palm oil (CPO) production to improve by 4.9% to 19 million tonnes this year, from 18.12 million tonnes in 2021, resulting in palm oil stocks increasing 21.1% to 1.95 million tonnes, from 1.61 million tonnes in 2021. This is excellent news to the industry players and market onlookers. It shows Malaysia is prepared to meet the encouraging demand for palm oil from the market, including from Egypt and Qatar. A few promising ideas, such as including Malaysia Palm Oil in the Egyptian Food Subsidy Scheme and exploring the private sectors, are further the applications of the rubberized road in Qatar. Further discussion is being conducted, and Malaysia is hopeful that the initiatives will benefit all involved parties.

6. The Hon. Minister has conducted missions to several countries beginning the year 2022 to increase exports of Malaysian commodities, especially palm oil. The countries visited are Saudi Arabia, Iran, Turkey, Pakistan, India, Bangladesh, Egypt, and Qatar. Malaysian companies also took part in these Ministerial missions to strengthen and re-establish bilateral relations. Among
the achievements are proposals to establish joint venture partnerships in India and Pakistan. There were also proposals from Qatar and Egypt to invest with Malaysian companies to set up production facilities in Malaysia. This is seen as a strategic move that will accelerate the commodities export to the regions.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
20 APRIL 2022

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Last Updated: 21 June 2022

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MEDIA RELEASE
MPIC TO MONITOR INDONESIA’S LATEST DEVELOPMENTS; CONFIDENT CPO
DEMAND REMAINS ROBUST

The fact that palm oil stockpile increased for the first time since October 2021 by 11.5% month-on-month (mom) to 1.64 million tonnes in April 2022 driven by higher output (+3.6% to 1.46 million tonnes) and weaker exports (-17.7% to 1.06 million tonnes) should not be a cause for concern.

This is because palm oil stockpile will likely dip in May 2022 on the back of seasonally lower crude palm oil (CPO) production (arising from the Ramadhan month) and stronger exports (following the Indonesian Government’s recent move to widen its export ban on raw materials for cooking oil).

However, Indonesia announced yesterday (May 19) that it has decided to lift its palm oil export ban from May 23 (Monday) following improvements in the domestic cooking oil supply situation and as Jakarta considers the welfare of 17 million workers in the palm oil industry.

Meanwhile, exports were dragged by lower exports to China (-50.8%), European Union (EU) (-23.2%) and Pakistan (-90.3%) due to several factors including (i) strict COVID-19 lockdowns which hampered palm oil shipments to China, and (ii) demand destruction as a result of high prices.

Nevertheless, preliminary data from AmSpec Agriculture Malaysia indicated that palm oil shipments alone have surged by 40.32% during the first 10 days of May on account of Indonesia’s absence from the global export market, a weak ringgit and widening palm discounts to bean oil.

CPO PRICE SPIKE

Recall that CPO prices surged past the RM7,000/tonne mark to hit its period peak of RM7,516/tonne following news that Indonesia had banned palm oil exports from April 28. The ban would only be lifted if the bulk cooking oil price comes down to 14,000 rupiah/litre across Indonesia (as of May 6, the average local price of cooking oil has dropped to 17,200 rupiah/litre from around 26,000 rupiah/litre).

Given Indonesia's reliance on palm oil exports and how a prolonged ban could seriously damage Indonesia's economy, the country as expected, has rescinded the decision to ban its palm oil exports. As it is, the MPIC wishes to put on record that it is in the midst of discussing with the Finance Ministry to look into the viability of slashing Malaysia’s export tax of palm oil to 4%-6% from the current 8% while at the same time to slow down the implementation of Malaysia’s biodiesel mandate to help meet the global demand amid an edible oil shortage.

This proposed temporary cut is pending a decision and We believe that Malaysian exporters are likely to be clear winners in the short term as global buyers will source for Malaysian palm oil.
Nevertheless, the MPIC urges industry players to focus closely on market variables that are capable to spark price volatility.

In the list of these variables are:

(i) the export policy of Indonesia
(ii) the recovery of palm oil production in Malaysia;
(iii) the adjustment of biodiesel policies in various countries;
(iv) progress of the Russia-Ukraine conflict; and
(v) the weather in both the US and South America.

STILL BULLISH PROSPECTS (FOR NOW)

On broader terms, the soft exports in April could be misleading as we believe international demand for edible oils which include palm oil is far from weak. April prices may be lower than March but remained at unprecedented levels. Year-to-date (YTD), CPO prices have averaged circa RM6,300/tonne which is significantly higher than the RM4,300/tonne average as projected by market analysts for 2022.

Looking ahead, CPO prices are likely to consolidate downward due to pending uptrend in monthly fresh fruit bunches (FFB) production rather than poor demand. Nevertheless, CPO prices should stay elevated due to the following factors:

•Tight supply: Supply of edible oils which are competing with palm oil is tight across the world. Henceforth, prices of vegetable oils such as soybean, rapeseed and sunflower oils are also strong. Together with seasonally stronger palm oil production in 2H 2022, edible oils and fats supply tightness should ease by 4Q 2022 but not by much. The prospect of a recovery is more likely in 2023; hence, palm oil prices may stay elevated till about mid-2023.

•Robust market: Despite some “demand destruction” due to very high prices, the overall market for palm oil is expected to remain robust. Indonesia’s challenge to meet domestic requirement indicate the strength of the international market for palm oil.

•Uptake from China: A key market for palm oil, China is poised to increase its palm oil demand later in the year as its economy is only gradually re-opening from the COVID-19 pandemic. Similarly, demand from the EU is likely to rise following the disruption to its traditional supply of sunflower and rapeseed oil from Ukraine and Russia.

•Oil price hike: The Russia-Ukraine conflict has also pushed up the prices of hydrocarbon fuels, creating a latent or “hidden” demand for biofuels if vegetable oil prices were to fall sufficiently.
The Ministry will continue to ensure that the palm oil industry, which is the country's main commodity, continues to contribute to national economic growth, thus benefiting all, especially smallholders and industry players.

The Ministry will continue to monitor the current situation involving Indonesia’s policy changes to ensure that the palm oil industry, which is the country's main commodity, continues to contribute to the country's economic growth, thus benefiting all, especially smallholders and industry players.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
20 MAY 2022

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Last Updated: 22 September 2022

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MEDIA STATEMENT
MPIC GRABS OPPORTUNITY TO PENETRATE BAKERY FATS
MARKET IN CHINA TO STRENGTHEN MALAYSIA’S PALM OIL
DOWNSTREAM SECTOR

1. THE encouraging outlook of China’s baking industry with baking fats (shortening) being one of the key raw materials augurs well for the downstream segments of Malaysia’s palm oil sector.

2. With baked goods such as cakes and bread becoming increasingly popular among the Chinese populace, so does the demand for palm oil-derived shortening and margarine which are both vital raw materials in the production of bakery-related products.

3. With the annual production of shortening in China far from meeting its growing domestic consumption demands which is escalating every year, the country has resorted to importing the main raw material from Indonesia and Malaysia whose export of shortening to China stood at 7,655 metric tonnes (MT) in 2021.

4. On the same note, China’s margarine market is also growing rapidly with an annual growth rate of 20%. The world’s most populous country which is also the second largest global economy
mainly imports margarine from Indonesia, with 650 MT coming from Malaysia in 2021, an increase of 10% from 590 MT in 2020.

5. Even though Malaysia’s ‘cake’ in China’s bakery industry is small at this moment, the world’s second largest palm oil producer is capable of expanding its market share in China’s bakery ingredient market with the right promotion and marketing strategies. With this is mind, home-grown shortening and margarine manufacturers should proactively weigh in on prospects of forging tie-ups with reputable bakery enterprises in China.

6. Although there are still sporadic lockdowns due to its ZeroCOVID-19 policy, the gradual re-opening of China’s borders to business travellers in the near future can serve as a good
opportunity for Malaysian bakery fats players to build business contacts, thus riding on this growing opportunity.

7. From 2017 to 2021, the market size of China’s bakery market has risen to 265.7 bil yuan (RM172.53 bil) from 187.7 bil yuan (RM121.88 bil) with an average compounded annual growth rate
(CAGR) of about 9% which is much higher than the growth rate of the global baking industry’s market size. It is expected that the market size of China’s baked food industry will reach 287.4 billion yuan (RM186.62 bil) in 2022.

8. Moreover, the registration of bakery-related companies in China has surged from 2,040 to 6,395 during the 2017-2021 period with an average CAGR of about 33%. In 1H 2022 alone, the number of registered Chinese bakery-related companies stood at 2,815. 2021 also saw the investment in China’s bakery industry topping 26 other industries with a total amount of 6.14 bil yuan (RM3.98 bil) which is attributable to post-COVID-19 recovery in economic activities.

9. To complement palm oil downstream players who are interested in solidifying their overseas business presence, I wish to highlight that the Ministry of Plantation Industries and Commodities (MPIC) has embarked on “The Global Movement to Champion the Goodness of Palm Oil” campaign as a platform to spark awareness about the high quality of Malaysian palm oil as well as to counter the various misinformation and false information levelled at our golden oil.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
21st SEPTEMBER 2022

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Last Updated: 08 July 2022

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PRESS STATEMENT
MALAYSIA CAN ILL-AFFORD TO BE A “SITTING DUCK” OF THE WESTERN ANTIPALM OIL CAMPAIGN

1. AS the world’s two top palm oil producers, Malaysia and Indonesia, have for the past two decades or so been subject to numerous anti-palm oil campaigns by western countries and the developed world, which eventually affected the marketability of palm oil and its related products in these markets.

2. The smearing campaign, which created negative perceptions towards palm oil –if not systematically and strategically put to rest–, can affect the competitiveness of Malaysian palm oil exports in the long haul.

3. As palm oil and its related products have been a major revenue contributor to the country’s economy as well as having played a significant role in reducing rural poverty (by providing employment) and improving infrastructure, Malaysia has resorted to counter such malicious/baseless claims via a ‘soft consultancy ’approach.

4. Historically, the negative image of palm oil started taking shape in Europe beginning in 2003, revolving around issues pertaining to sustainability before moving to the nutritional aspects of palm oil.

5. The current practice of ‘no palm oil ’or ‘palm oil-free labelling in France and Belgium can be traced back to 2008, when the French retail chain Carrefour started to substitute palm oil in potato chips with sunflower oil.

6. Singling out palm oil with the ‘palm oil-free marketing and labelling campaigns convinced consumers that palm oil is terrible whether for nutritional or environmental reasons or both.

7. Recall that in 2019, the European Union (EU) has classified palm oil as a crop with a high-risk rate towards indirect land-use change, hence deemed to contribute to deforestation and loss of biodiversity. EU member countries are currently adoptingthe European Union Renewable Energy Directive II in their respective legislation.

8. Such a classification exercise will affect palm oil being a potential biofuel source since its usage will be gradually reduced beginning in 2023 before being ‘eliminated totally ’ as an EU biofuel source in 2030.

9. This has led to Malaysia initiating legal action against the EU and two of its members – France and Lithuania – on 15 January 2021 under the World Trade Organization’s (WTO) Dispute Settlement Mechanism. Such development came about after the EU implemented the directive without considering Malaysia’s commitment and views, even after the latter had given its feedback and sent economic and technical missions to Europe.

10.Malaysia will also act as a third party in a separate WTO case lodged by Indonesia, which is the world’s biggest palm oil producer, as a sign of solidarity and support.

11.In all fairness, Malaysia is left with no choice but to retaliate against “the bullies” even as it understands that the ensuing legal process can be dragging and costly, given it entails massive preparation and submission of documents for argument as well as meticulous research and ‘countless hours of meeting and deliberation by the panel tasked to look into the matter.

12.Thus far, no other restrictions have been imposed by the EU against palm oil. However, the fact remains that medium- to long-term damage has already been inflicted on palm oil’s image in the eyes of European consumers.

13.In this regard, the Ministry of Plantation Industry and Commodities (MPIC) will continue to closely monitor any latest developments from a legislation standpoint by the EU, which can potentially tarnish the reputation of palm oil, hence adversely affecting the viability of the palm oil and palm oil-related industry in Malaysia. I call upon all Malaysians to join MPIC and rise up to defend our palm oil in the eyes of the world.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
22 JUNE 2022